Section I Important Notice, Contents and InterpretationThe Board of Directors and the Board of Supervisors of the Company and its directors,supervisors and senior management warrant that the information contained in this report istruthful, accurate and complete and there are no false presentations or misleading statementscontained in, or material omissions from, this report, and that they assume severally andjointly legal liability.Declaration by Deng Yingzhong, legal representative, Dong Ye, person in charge of accounting,and Xu Xianjing, person in charge of accounting department of the Company warrant thatthe information contained in this report is truthful, accurate, and complete.All directors attended the meeting of the Board of Directors where this report was reviewed.Any discrepancy between the total number and the sum of sub-items in this report is causedby rounding off.This report may involve forward-looking statements on the Company's plan which by nomeans constitute any substantive commitment by the Company for investors. Investors areadvised to be aware of investment risks.I. Risk of Great Fluctuations in Pulp PricesPulp, as an international bulk raw material, is subject to the global economic cycle.Pulp prices have tumbled sharply since 2019, owing to weaker Chinese market demand, tradedisputes across the world, exchange rate movement, and increased pulp inventories. Besides,such prices continued to fall with fluctuations in the first half of 2020.The primary raw material of the Company is pulp, accounting for 40%-60% of the totalproduction costs. Therefore, the above situation poses a risk of great fluctuations in pulpprices to the Company.II. Currency RiskImported machinery equipment and pulp plus exported products of the Company are mainlysettled in USD, HKD, and EUR. Since exchange rates are affected by the internationaleconomic situation, the Company faces exchange rate risks.III. Regional Market Competition RiskHousehold paper is a vast market in China in terms of both geography and market space.The main competition in the household paper industry lies in regional markets, given the lowunit value, transportation expenses taking up a large part of the sales price, and limitations ofthe transportation radius. Additionally, high-end, mid-end, and low-end products compete inregional markets, as influenced by spending power and consumption habit. In regard to thedevelopment trend of the industry, mid- and high-end household paper of national brands ismore competitive. However, a handful of regional brands have an advantage in some regionalmarkets. China's household paper industry requires continued integration, compared withoverseas counterparts.The Company embraces production bases and a sales network across the country and offersmid- and high-end products under national brands. Nevertheless, it is inescapable from therisk of regional market competition.IV. Industrial Policy Risk
Stricter requirements have been raised for the papermaking industry in the aspects of scale,technology, equipment, and environmental protection, as multiple industry plans, such as thePapermaking Industry Development Policy, the Notice on the Management of PollutionDischarge License for Thermal Power and Papermaking Industries and High Chimney EmissionSources in Pilot Cities in Beijing-Tianjin-Hebei Region, and the Opinions of China PaperAssociation on "Thirteenth Five-year" Development Plan of Papermaking Industry, as well assupporting policies successively issued by relevant departments. Particularly, a number ofmeasures have been introduced through environmental protection policies to drive theall-round, coordinated, and sustainable development of the household paper industry,including: 1) optimizing the industrial distribution to reasonably allocate resources andpromoting clean production to preserve the ecological environment; 2) pushing energyconservation and emission reduction to shut down outdated production facilities, andadjusting product structure and improve product quality; and 3) developing resource-savingmodels to advocate green consumption, and optimizing enterprise structure and drive M&Aand restructuring. These policies are designated to strengthen household paper industryconcentration, close backward production facilities, and optimize resource allocation. TheCompany, as an enterprise in the first echelon of the domestic household paper industry, isunderpinned by national policies related to the sustainable development of the householdpaper industry. Precisely because of this, industrial policy adjustment, if any, will impact theproduction and operations of the Company, to some extent.V. Safe Production RiskMost of the materials involved in the household paper industry are flammable, including themain raw material of pulp, the main packing materials of plastic-film packing bags andcartons, the semi-finished product of body paper, and finished products.Due to the characteristics of low unit value and large market consumption, household papermanufacturers have to keep a mass of pulp, packing materials, and semi-finished and finishedproducts from the entry of raw materials to the plant to the delivery of products to the market.Thus, fire can cause enormous losses to such manufacturers.In view of this, the Company has formulated strict fire protection policies for the warehousemanagement of raw materials and finished products and the placement and transfer ofsemi-finished products, equipped workshops and warehouses with adequate fire protectionequipment, and bought full insurance for risky properties. Even so, it still faces safeproduction risks.VI. Logistics Transportation RiskThe spread of the COVID-19 pandemic since the beginning of 2020 has hindered domesticand foreign logistics transportation by sea and land to varying degrees, affecting both theCompany's procurement and sales and upstream suppliers and downstream dealers. In otherwords, the Company has suffered from multiple dimensions. Risks are unavoidable for theCompany at the mid- and downstream of the household paper industry chain, though impactsof the pandemic are phased and temporary."X. Risks and Countermeasures" in "Section IV Discussion and Analysis of OperationStatus" in this report is devoted to elaborated on possible risks and countermeasures of theCompany. Investors are advised to pay attention to the relevant contents.The Company plans not to distribute cash or share dividends or convert capital reserve toshare capital.
Table of Contents
Section I Important Notice, Contents and Interpretation ...... 1
Section II Company Profile and Key Financial Indicators ...... 5
Section III Business Overview ...... 8
Section IV Discussion and Analysis of Operation Status ...... 12
Section V Important Events ...... 22
Section VI Equity Changes and Shareholders ...... 48
Section VII Details of Preference Shares ...... 55
Section VIII Convertible Corporate Bonds ...... 56
Section IX Profiles of Directors, Supervisors, and Senior Management ...... 57
Section X Corporate Bonds ...... 59
Section XI Financial Report ...... 60
Section XII Catalog of Documents for Reference ...... 181
Definitions
| Term | Means | Definition |
| The Company, Company, issuer, joint-stock company, C&S | Means | C&S Paper Co., Ltd. |
| Zhongshun Group | Means | Guangdong Zhongshun Paper Group Co., Ltd. |
| Hong Kong C&S | Means | Chung Shun Co. is a Hong Kong-based company. |
| Zhongshun Trading, Zhongshan Trading | Means | Zhongshan Zhongshun Trading Co., Ltd. |
| Zhong Shun International | Means | Zhong Shun International Co., Ltd. is a Hong Kong-based company. |
| C&S Hong Kong | Means | C&S Hong Kong Co., Ltd. is a Hong Kong-based company. |
| Beijing C&S | Means | Beijing C&S Paper Co., Ltd. |
| Xiaogan C&S | Means | Xiaogan C&S Trading Co., Ltd. |
| Chengdu C&S | Means | Chengdu Zhongshun Paper Co., Ltd. |
| Hangzhou Jie Rou | Means | Hangzhou Jie Rou Trading Co., Ltd. |
| Shanghai Huicong | Means | Shanghai Huicong Paper Co., Ltd. |
| Sichuan C&S, Chengdu Tiantian | Means | C&S (Sichuan) Paper Co., Ltd., formerly known as Chengdu Tiantian Paper Co., Ltd. |
| Jiangmen Jie Rou | Means | Jiangmen C&S Paper Co., Ltd. |
| Jiangmen C&S | Means | Jiangmen Zhongshun Paper Co., Ltd. |
| Zhejiang C&S | Means | Zhejiang Zhongshun Paper Co., Ltd. |
| Hubei C&S | Means | C&S (Hubei) Paper Co., Ltd., formerly known as Hubei Zhongshun Hongchang Paper Co., Ltd. |
| Yunfu C&S | Means | C&S (Yunfu) Paper Co., Ltd. |
| Yunfu Trading | Means | C&S (Yunfu) Trading Co., Ltd. |
| Tangshan Branch, Tangshan C&S | Means | C&S Paper Co., Ltd. Tangshan Branch |
| Zhongshan Jie Rou Paper | Means | C&S (Zhongshan) Paper Co., Ltd., formerly known as Zhongshan Tongfu Trade Co., Ltd. |
| Macao C&S | Means | C&S (Macao) Co., Ltd. |
| Dazhou C&S | Means | C&S (Dazhou) Paper Co., Ltd. |
| Sun C&S | Means | Sun Daily Necessities Co., Ltd. |
Section II Company Profile and Key Financial IndicatorsI. Company Profile
| Stock name | C&S | Stock code | 002511 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Chinese name of the company | C&S Paper Co., Ltd. | ||
| Chinese abbreviation of the company (if any) | C&S | ||
| English name of the company (if any) | C&S Paper Co., Ltd. | ||
| English abbreviation of the company (if any) | C&S | ||
| Legal representative | Deng Yingzhong | ||
II. Contact and Contact Information
| Board secretary | Representative of securities affairs | |
| Name | Zhou Qichao | Cao Hui |
| Address | 136 Caihong Avenue, West District, Zhongshan City | 136 Caihong Avenue, West District, Zhongshan City |
| Tel. | 0760-87883333 | 0760-87883333 |
| Fax | 0760-23886886 | 0760-23886886 |
| seven.zhou@cs-paper.com | huicao@cs-paper.com |
III. Other Information
1. Company contact
Whether the registered and office addresses and their post codes, official website, and email of theCompany were changed during the reporting period
□ Applicable √ Inapplicable
The registered and office addresses and their post codes, official website, and email of the Companywere not changed during the reporting period. See the 2019 Annual Report for details.
2. Information disclosure and place where financial statements are keptWhether information disclosure and the place where the semi-annual report is kept were changedduring the reporting period
□ Applicable √ Inapplicable
The newspapers selected by the Company for information disclosure, the websites designated by theChina Securities Regulatory Commission (CSRC) for publishing the semi-annual report, and theplace where the semi-annual report is kept were not changed during the reporting period. See the2019 Annual Report for details.
3. Other relevant information
Whether other relevant information was changed during the reporting period
√ Applicable □ Inapplicable
The Company changed matters of industrial and commercial registration during the reportingperiod.
(1) The business cope was expanded from "R&D, production, processing, and sales (includingonline sales): High-end household paper series products, tissue boxes, sanitation supplies, cosmetics,non-woven products, and daily necessities (limited to plastic products for daily use, chemicals fordaily use, metalware for daily use, rubber products for daily use, and ceramics for daily use). Pulpimport and export" to "R&D, production, processing, and sales (including online sales): High-endhousehold paper series products, tissue boxes, sanitation supplies, cosmetics, non-woven products,daily necessities (limited to plastic products for daily use, metalware for daily use, rubber productsfor daily use, and ceramics for daily use), and chemicals for daily use (excluding hazardouschemicals), Class I medical devices. Pulp import and export (excluding state trading commodities;products in the quota system or requiring a license are applied for in line with relevant nationalregulations). Operations and production of Class II and III medical devices (involving theproduction of medical devices and cosmetics)".
(2) The registered capital was changed from "RMB1,306,099,573" to "RMB1,308,891,273". Seethe Announcement on the Completion of Industrial and Commercial Registration Amendment ofCompany and Partially-owned Subsidiaries (Announcement No.: 2020-19) published on March 31,2020, in the designated media for information disclosure, namely, Securities Times (STCN,www.stcn.com), China Securities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com),Shanghai Securities News (www.cnstock.com), and CNINFO (www.cninfo.com.cn).IV. Main Accounting Data and Financial IndicatorsWhether the Company needs to perform retrospective adjustment or restatement of accounting datafor previous years
□ Yes √ No
| Current reporting period | Same period last year | YoY changes | |
| Operating income (RMB) | 3,616,201,399.80 | 3,172,389,026.96 | 13.99% |
| Net profit attributable to shareholders of listed companies (RMB) | 452,699,484.61 | 274,874,634.43 | 64.69% |
| Net profit attributable to shareholders of listed companies less non-recurring profit and loss (RMB) | 446,535,737.96 | 269,657,245.92 | 65.59% |
| Net cash flows from operating activities (RMB) | 504,558,588.33 | 734,985,638.36 | -31.35% |
| Basic earnings per share (RMB/share) | 0.3519 | 0.2162 | 62.77% |
| Diluted earnings per share (RMB/share) | 0.3462 | 0.2156 | 60.58% |
| Weighted average return on net assets | 10.46% | 7.90% | 2.56% |
| End of the current reporting period | End of last year | Changes in the current reporting period from the end of last year | |
| Total assets (RMB) | 6,612,703,642.31 | 6,026,271,823.64 | 9.73% |
| Net assets attributable to shareholders of listed companies (RMB) | 4,532,240,640.94 | 4,077,004,459.23 | 11.17% |
V. Differences between Accounting Data Disclosed under Domestic and Overseas AccountingStandards
1. Differences in net profit and net assets between the financial statements disclosed under theIAS and the PRC GAAP
□ Applicable √ Inapplicable
The Company did not have any differences in net profit and net assets between the financialstatements disclosed under the IAS and the PRC GAAP during the reporting period.
2. Differences in net profit and net assets between the financial statements disclosed underoverseas accounting standards and the PRC GAAP
□ Applicable √ Inapplicable
The Company did not have any differences in net profit and net assets between the financialstatements disclosed under overseas accounting standards and the PRC GAAP during the reportingperiod.VI. Items and Amounts of Non-Recurring Profit and Loss
√ Applicable □ Inapplicable
Unit: RMB
| Item | Amount | Remarks |
| Profit and loss from disposal of non-current assets (including the offset portion with provisions for asset impairment already set aside) | -896,870.05 | |
| Government grants measured at fair value through profit and loss of the current period (except for the government grants that are closely related to the Company's business and distributed in a fix quota or amount in accordance with unified national standards) | 16,474,867.62 | |
| Profit and loss from assets entrusted to others for investment or management | 2,287,274.87 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds |
| Other non-operating expenses excluding the above items | -11,371,164.42 | |
| Less: Influence of income tax | 330,361.37 | |
| Total | 6,163,746.65 | -- |
The reasons why the Company defined certain items as non-recurring profit and loss in line with theNo. 1 Explanatory Announcement on Information Disclosure of Companies Offering Securities tothe Public—Non-recurring Profit and Loss and some items listed in the above announcement asrecurring profit and loss shall be specified.
□ Applicable √ Inapplicable
The Company did not define any non-recurring profit and loss defined or listed in the No. 1Explanatory Announcement on Information Disclosure of Companies Offering Securities to thePublic—Non-recurring Profit and Loss as recurring profit and loss.
Section III Business OverviewI. Main Businesses of the Company during the Reporting PeriodThe Company's main businesses include R&D, production, processing, and sales (including onlinesales): High-end household paper series products, cotton tissues, and personal care products.The Company features three major brands, namely, Jie Rou, Sun, and Dolemi, and two mainproducts, that is, household paper and personal care products. Specifically, its products fall intoseven major categories, including centerfeed rolls, coreless rolls, facial tissues, tissue handkerchiefs,wipes, cotton tissues, and personal care products. Main information on its products is as follows:
i. Household paper
1. Face Series: Face tissue handkerchiefs adopts unique papermaking processes. They remain pliableeven when they are wet and can be used as a face towel. Face tissue handkerchiefs is a knock-outproduct under the brand of Jie Rou. Based on constant quality upgrading, the newly developedfour-layer thick facial tissues are pliable and thick. One piece of this facial tissue is as thick as twopieces of average tissues. Moreover, its exquisite and fashionable knurling make user experiencebetter.
2. Lotion Series: Lotion water retention facial tissues are characterized by the skin-friendly lotion andmoisturizing factor. They feel soft and smooth, thanks to the water retention function. This product isespecially suitable for delicate skin and applicable to mothers and infants, people with nasal allergy,and people wearing makeup.
3. Natural Wood Series: The Company launched the first noble yellow tissues (with low whiteness),"Jie Rou Natural Wood Series" in 2018, based on the consumption concepts of health and safety. Itssoft and pliable texture is attributable to 100% imported raw wood pulp. Quality of the whole series issuperb.
4. Cotton Tissue Series:
"Cotton Tissue" products: The products feature 100% fresh cotton, complete physical processes, andunbleached tissues. As they are soft, thick, and skin-friendly. They can be used, dry and wet. Besides,they can be used for personal cleaning and care as cotton pads and face towels, especially infants andwomen.Absorbent towels: These products are made from 100% cotton, soft and skin-friendly. They canquickly absorb sweat and leave your skin dry and comfortable. Additionally, the absorbent towelsare mild, non-stimulating, and natural. They are an optimal choice for delicate skin.
5. Sun Series: The Company re-activated the brand, Sun, in 2019 in order to accelerate the coverageof high-, mid-, and low-end household paper markets in China and satisfy consumption needs atdifferent levels. Sun is positioned to be a highly cost-effective product that has better quality yetlower prices and faces over 60% of the mid- and low-end markets in China. Moreover, it is the key toraise the market share of the Company.
6. Jin Zun Series: Jin Zun products are made from 100% imported raw wood pulp, thick, pliable, andcost-effective.
7. Wipes:
Kitchen wipes: Quality and thick pearl non-women cloth is used to produce the soft and pliablekitchen wipes. It has an enhanced effect of deoiling and cleaning. Additionally, coconut oil extractis added to protect your hands.
Baby wipes: The products have passed oral mucous and skin irritating tests. Featuring a mildformula, they are suitable for babies.Portable wipes: These products are made from thickened spunlace non-woven cloth, so they arethick. One piece of this wipe is as thick as two pieces of average wipes. They are mild and free fromalcohol, pigments, and fluorescent agents.Makeup removal wipes: The products are mild and free from alcohol or migrating fluorescentbrighteners. They have passed the skin irritating test. They are rich in Honeysuckle Flower andChamomilla Recutita Flower extracts. While removing your makeup, they can care for your skin.Your skin will feel refreshing and moisturizing after makeup removal.Toilet wipes: These products are natural, mild, and alcohol-free. They have a weakly acidic formula.They have passed vagina mucosa and skin irritating tests. They can effectively remove odor andcare for your skin.Disinfectant wipes: These products feel soft and comfortable and are free from migratingfluorescent brighteners. They are made from 100% cotton non-woven cloth. With the alcohol-basedformula, the wipes have an effective cleaning and disinfection effects. You will feel more assuredbecause of quick volatilization.ii. Personal care productsDolemi Series: In June 2019, the Company launched a new personal care brand, Dolemi, to caterfor upgrading consumption. The surface of Dolemi products is made from cotton. They arecharacterized by two-way air circulation. They are elastic, soft, and fit. Thanks to the good aircirculation, you will feel at ease. They enable the women pursuing better quality of life toexperience "thin pads and get rid of side leakage".Facial masks: In quick response to the pandemic, the Company started to produce and sell facialmasks to address the shortage of facial masks in March 2020. Its products include facial masks foradults and children. The three-layer facial masks can filter over 95% of bacteria so as to betterprotect consumers.The Company has always centered on consumer needs and value user experience. As an enterprisein the first echelon of the domestic household paper industry, it has gathered top R&D talent,embraced outstanding and independent R&D technology, and featured industry-leading innovationcapabilities. The Company keeps offering better and more diversified products by acclimating theconsumption trend and satisfying multi-level and diversified needs.II. Major Changes in Main Assets
1. Major changes in main assets
| Main assets | Major changes |
| Equity assets | There were no major changes during the reporting period. |
| Property and equipment | There were no major changes during the reporting period. |
| Intangible assets | There were no major changes during the reporting period. |
| Construction work in progress | There were no major changes during the reporting period. |
2. Main overseas assets
□ Applicable √ Inapplicable
III. Analysis of Core Competitiveness
1. Included in the first echelon of the domestic household paper industryThe Company is a top-performing enterprise in the first echelon of the domestic household paperindustry. Besides, it is the first and only A-share listed household paper enterprise in China withproducts sold at home and abroad including Southeast Asia, the Middle East, and Europe.
2. Constantly optimized product structure
The Company boasts three major brands, namely, Jie Rou, Sun, and Dolemi. Its current brandpositioning is: High-end Life, High-grade Jie Rou. Its products primarily fall into seven majorcategories, including centerfeed rolls, coreless rolls, facial tissues, tissue handkerchiefs, wipes,cotton tissues, and personal care products. The brands are superior in quality, taste, and category.Furthermore, the Company has continuously optimized its product structure and raised theproportion of high-end and high-gross profit products and non-roll categories. In addition, it hasstrengthened the sales of major series like Face, Lotion, and Natural Wood, formulated distributionstandards for each major channel, raised the market share in each channel, and continuouslyimproved gross profit and profitability.
3. Stable and effective management team
The R&D, production, procurement, sales, quality control, and operation teams have successivelyattracted excellent professionals since 2014. At present, the Company features the most outstandingR&D, production, and sales teams. Its product R&D and quality and marketing management havebeen effectively reinforced. The management team of the Company has formulated long-term andstrategic plans in line with actual situation of the Company, industry development level, and marketdemand. Moreover, it has made reasonable decisions on operation management, covering R&D,production, marketing, investment, and financing, and effectively implemented such decision. Theexcellent management team is the fundamental guarantee of maintaining competitiveness andachieving sustainable development in the future.
4. Nationwide marketing network
The Company has been building and improving its marketing networks based on its keen andstrategic insights and reasonable layout. The Company has enhanced its profitability by expandingits channels from a single dealer channel in 2015 to six channels, namely, GT (general tradechannels), KA (key account channels), AFH (away from home channels), EC (e-commercechannels), RC (new retail channels), and SC (maternal and infant channels). Its current marketingnetwork covers most of the prefecture-level (and county-level) cities. Products are directly sold tocounties and then distributed to towns. The Company has adopted a segmented and flat marketoperation method and expanded the dealer network.Furthermore, the Company has devoted more resources to e-commerce platforms, such as Tmall,Taobao, JD, Vipshop, Suning, and Pinduoduo and built and improved the corresponding supplychain system. Meanwhile, it has intensified its routine operation management and formed aprofessional e-commerce operation team. In addition, it has developed an AFH service team forAFH channels and customer bases to match the growing AFH market. The Company has constantlyconsolidated its market basis, improved consumer experience, and enhanced brand reputation,
attributable to a robust sales network and quality and diversified products, in order to achieve futuresustainable and stable growth.
5. Nationwide layout of production bases
The Company has developed a production layout covering East China, South China, West China,North China, and Central China, through its subsidiaries, including Jiangmen C&S, Yunfu C&S,Sichuan C&S, Zhejiang C&S, Hubei C&S, and Tangshan Branch. Thanks to the nationwide layoutof production bases, the Company has narrowed the distance to customers, reduced transportationcosts, and enhanced transportation efficiency.
6. Product quality at an international level
The Company has always regarded product quality as its lifeline of survival and development, sinceits incorporation. First-class quality derives from first-class raw materials. Raw materials of theCompany have passed the ISO quality management system certification. Besides strict feedinspection procedures, it has introduced HACCP food hygiene and safety management system tocontrol the hygiene and quality of products from the source. Moreover, its products have passedISO9001 quality management system certification which is the strictest detecting system forproduct quality. Meanwhile, the Company has observed internationally advanced qualitymanagement system standards and utilized advanced processes, formulas, and control procedures toensure each technical performance indicator.
7. Good R&D capabilities
Along with the emergence of modern lifestyle, the range of application of household paper has beenincreasing. Household paper has become a daily necessity. People are enjoying the comfort broughtby such products. The Company features a complete product development system. Its R&Ddepartments embrace strong and independent R&D capabilities and outstanding formulas andprocesses. Recently, the Company has been launching new brands, such as Face, Lotion, NaturalWood, cotton tissues, and personal care products, and gained a leading position in the industry.
8. First-class production equipment
The Company drives development via technology. It has introduced advanced papermaking andprocessing equipment from countries and regions like Austria, Germany, Italy, Japan, South Korea,and Taiwan. Advanced technology and highly automatic equipment have strengthened theCompany's efficiency, further satisfied the ever-growing market demand, and served as anunstoppable driving force to development.
9. High awareness and technology of environmental protection
Along with the development of industrialization, the concept of environmental protection has beendeeply rooted among the people. The Company has adhered to the concept of "seeking greenbenefits, fulfilling corporate social responsibilities" and utilized advanced environmental protectiontechnology to pursue its objective of environmental protection. Its emissions, such as waste waterand gas, are superior to the national standards and industry-leading.
Section IV Discussion and Analysis of Operation Status
I. OverviewThe COVID-19 pandemic exerted a short-term influence on the procurement, production, and sales ofthe household paper industry in the first half of 2020. Nevertheless, the Company rapidly respondedat the beginning of the outbreak and converted challenges to opportunities, by resuming productionearly and routine operations at the fastest rate. Meanwhile, the Company has upheld its core strategiesand operation objectives. It improved results and profit steadily by adopting effective measures,including expanding categories and channels and accelerating marketing and promotion. In H1 2020,it recorded operating income of RMB3,616 million with a YoY increase of 13.99% and net profitattributed to the listed company of RMB453 million, up by 64.69% YoY. Key tasks of the Companyare reviewed below:
1. Expansion of product categories to drive sales
Consumption habits changed amid the pandemic during the reporting period. The Company quicklyadapted to the consumption trend, continuously enriched its channels, launched new products likefacial masks, disinfectant wipes, hand sanitizers, and mouth wash to effectively raise its brandeffect and seized another profit growth point. Favorable sales results during the reporting periodpromoted the continuous improvement in the operating results.
2. Constant optimization of product structure + improvement of channels to push steadygrowth in salesDuring the reporting period, the Company accelerated to introduce new and key products,constantly raised the proportion of high-gross margin products, and further optimized its productstructure. In addition, it actively adapted to changes, kept optimizing its marketing system, andstimulated online consumption growth despite the pandemic. Meanwhile, it invested more resourcesin the layout and development of online business and exerted great efforts to improve otherchannels. Favorable results were achieved in all channels during the reporting period. TheCompany's gross margin in household paper reached 46.19%, making it the top enterprise in thedomestic household paper industry.
3. Increase in gross margin thanks to the decrease in international pulp pricesThe price of pulp, the main raw material of the Company, declined during the reporting period. As aresult, the Company's production costs decreased, while its gross margin and profitability increased.
4. Employee enthusiasm boosted by the first release period of unlocking/exercising of the firstlygranted portion of the stock incentive planDuring the reporting period, the Company successfully unlocked the restricted stock in the firstunlock period and exercised the stock option in the first exercise period of the firstly granted portionof the 2018 Stock Option and Restricted Stock Incentive Plan. 5,593,428 shares of the restrictedstock were unlocked, while the number of vesting stock options was 3,431,505 shares. Employeesenjoyed the development dividends of the Company through the unlock/exercise. They weremotivated to add value to work. The unlock/exercise laid a solid foundation for the sustainable andstable development of the Company.
5. Fulfillment of corporate social responsibilities and demonstrating the corporate culture as atop-performing enterpriseAmid the pandemic, the Company, as a leading enterprise in the household paper industry,vigorously fulfilled its corporate social responsibilities and quickly donated RMB10.80 million incash and disinfectant wipes and other household paper products worth RMB500,000 to support
pandemic prevention and control. Moreover, it contributed to fighting against the pandemic bydonating over one million pieces of surgical masks and over 5,000 pads for women to front-linemedical institutions.II. Analysis of Main BusinessesOverviewSee "I. Overview" in "Discussion and Analysis of Operation Status" for details.YoY changes in main financial data
Unit: RMB
| Current reporting period | Same period last year | YoY changes | Reason of change | |
| Operating income | 3,616,201,399.80 | 3,172,389,026.96 | 13.99% | |
| Operating cost | 1,931,406,918.16 | 2,008,336,231.02 | -3.83% | |
| Selling expenses | 848,071,082.60 | 607,769,281.49 | 39.54% | Selling expenses rose by RMB240,301,801.11 or 39.54% during the reporting period from the same period last year, mainly because: First, the sales revenue increased. Second, the Company kept raising its market input, exerted great efforts for promotion, and expanded the sales network. |
| Administrative expenses | 185,701,854.01 | 126,787,650.22 | 46.47% | During the reporting period, management costs were up by RMB58,914,203.79 or 46.47% YoY, mainly due to the increase in expenses incurred from share-based payment, payroll, and depreciation and amortization expenses. |
| Finance expenses | -1,022,002.23 | 14,824,423.41 | -106.89% | During the reporting period, management costs were down by RMB15,846,425.64 or 106.89% YoY, mainly due to the decrease in bank interest expenses and increase in exchange gain. |
| Income taxes | 85,783,253.92 | 63,045,961.23 | 36.06% | During the reporting period, management costs were up by RMB22,737,292.694 or 36.06% YoY, mainly due to the increase in total profit. |
| Investment in R&D | 90,860,828.24 | 64,040,654.87 | 41.88% | During the reporting period, management costs were up by RMB26,820,173.37 or 41.88% YoY, mainly due to the increase in R&D expenses. |
| Net cash flows from operating activities | 504,558,588.33 | 734,985,638.36 | -31.35% | Net cash flows from operating activities: During the reporting period, it declined by RMB230,427,050.03 or 31.35% from a year earlier, primarily attributable to increased payment for materials and taxes. |
| Net cash flows from investing activities | -241,861,919.70 | -357,270,668.08 | 32.30% | Net cash flows from investing activities: During the reporting period, it increased by RMB115,408,748.38 or 32.30% from a year earlier, primarily attributable to decreased payment for engineering equipment. |
| Net cash flows from financing activities | -45,815,658.83 | -173,684,376.51 | 73.62% | Net cash flows from financing activities: During the reporting period, it increased by RMB127,868,717.68 or 73.62% from a year earlier, primarily attributable to increased |
| payment for loan proceeds received and decreased repayment for loans. | ||||
| Net increase in cash and cash equivalents | 220,436,993.67 | 203,573,288.77 | 8.28% |
Any major changes in the profit composition or profit source of the Company during the reportingperiod
□ Applicable √ Inapplicable
No major change occurred in the profit composition or profit source of the Company during thereporting period.Composition of operating income
Unit: RMB
| Current reporting period | Same period last year | YoY changes | |||
| Amount | Proportion against operating income | Amount | Proportion against operating income | ||
| Total operating income | 3,616,201,399.80 | 100% | 3,172,389,026.96 | 100% | 13.99% |
| By Industry | |||||
| Household paper | 3,533,490,254.91 | 97.71% | 3,117,352,958.19 | 98.27% | 13.35% |
| Personal care | 67,214,587.03 | 1.86% | 419,218.91 | 0.01% | 15,933.29% |
| Others | 15,496,557.86 | 0.43% | 54,616,849.86 | 1.72% | -71.63% |
| By Products | |||||
| Finished products | 3,595,014,915.99 | 99.41% | 3,103,060,788.64 | 97.82% | 15.85% |
| Semi-finished products | 5,689,925.95 | 0.16% | 14,711,388.46 | 0.46% | -61.32% |
| Others | 15,496,557.86 | 0.43% | 54,616,849.86 | 1.72% | -71.63% |
| By Regions | |||||
| Chinese mainland | 3,522,252,149.36 | 97.40% | 3,104,647,040.29 | 97.86% | 13.45% |
| Overseas | 93,949,250.44 | 2.60% | 67,741,986.67 | 2.14% | 38.69% |
Industries, products, or regions that accounted for over 10% of the Company's operating income oroperating profit
√ Applicable □ Inapplicable
Unit: RMB
| Operating income | Operating cost | Gross profit margin | YoY changes in operating income | YoY changes in operating cost | YoY changes in gross margin | |
| By Industry | ||||||
| Household paper | 3,533,490,254.91 | 1,901,531,921.16 | 46.19% | 13.35% | -2.85% | 8.98% |
| By Products | ||||||
| Finished products | 3,595,014,915.99 | 1,913,451,891.52 | 46.77% | 15.85% | -1.57% | 9.42% |
| By Regions | ||||||
| Chinese mainland | 3,522,252,149.36 | 1,883,003,659.17 | 46.54% | 13.45% | -3.82% | 9.60% |
For changes in the statistical caliber for the main business data during the reporting period, theCompany was subject to the main business data for the current period according to the year-endstatistical caliber.
□ Applicable √ Inapplicable
Explanation for +30% deviation YOY of relevant data
□ Applicable √ Inapplicable
III. Analysis of Non-main Businesses
√ Applicable □ Inapplicable
Unit: RMB
| Amount | Proportion against total profit | Cause | Is it consistently applied? | |
| Investment income | 2,287,274.87 | 0.42% | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds | No |
| Profit and loss from changes in fair value | 0.00 | 0.00% | ||
| Asset impairment | -850,381.40 | -0.16% | Provision for impairment of inventories | No |
| Non-operating income | 3,169,241.16 | 0.59% | Government grants, income from fine and compensation, and others | No |
| Non-operating expense | 13,240,183.16 | 2.46% | External donations and others | No |
IV. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: RMB
| End of the current reporting period | End of the same reporting period last year | Changes in proportion | Explanation | |||
| Amount | Proportion against total assets | Amount | Proportion against total assets | |||
| Monetary funds | 933,473,976.97 | 14.12% | 634,450,928.36 | 11.34% | 2.78% | Monetary funds rose by RMB299,023,048.61 or 47.13% at the end of the current reporting period from a year earlier, mainly owing to the increase in the balance at the beginning of the current report from the same period last year. |
| Accounts | 822,077,129.81 | 12.43% | 726,655,599.93 | 12.99% | -0.56% | |
| receivable | ||||||
| Inventory | 1,178,918,505.39 | 17.83% | 888,996,071.16 | 15.89% | 1.94% | Monetary funds rose by RMB289,922,434.23 or 32.61% at the end of the current reporting period from a year earlier, mainly owing to the increase in raw materials of the current report from the same period last year. |
| Investment property | 35,336,048.69 | 0.53% | 34,753,136.68 | 0.62% | -0.09% | |
| Long-term equity investment | 0.00 | 0.00% | 0.00 | 0.00% | 0.00% | |
| Property and equipment | 2,907,864,726.86 | 43.97% | 2,633,132,265.18 | 47.06% | -3.09% | |
| Construction work in progress | 22,256,470.46 | 0.34% | 296,753,901.64 | 5.30% | -4.96% | Monetary funds decreased by RMB274,497,431.18 or 92.50% at the end of the current reporting period from a year earlier, mainly owing to the decrease in construction in progress of the current report from the same period last year. |
| Short-term loans | 161,860,368.50 | 2.45% | 215,135,598.86 | 3.84% | -1.39% | |
| Long-term loans | 0.00 | 0.00% | 24,000,000.00 | 0.43% | -0.43% | Monetary funds decreased by RMB24,000,000.00 or 100.00% at the end of the current reporting period from a year earlier, mainly owing to prepayment of long-term borrowings of the current report from the same period last year. |
2. Assets and liabilities measured at fair value
□ Applicable √ Inapplicable
3. Restriction of main assets and rights as at the end of the reporting period
| Item | Closing book value of the period (RMB) | Reason for restriction |
| Monetary funds | 37,040,130.33 | Margins for letter of credit and notes were issued. |
| Total | 37,040,130.33 |
V. Analysis of Investment
1. Overview
√ Applicable □ Inapplicable
| Investment amount during the reporting period (RMB) | Investment amount of previous year (RMB) | Changes |
| 401,314,982.57 | 358,177,083.79 | 12.04% |
2. Major equity investment during the reporting period
□ Applicable √ Inapplicable
3. Major non-equity investment during the reporting period
□ Applicable √ Inapplicable
4. Financial assets measured at fair value
□ Applicable √ Inapplicable
5. Financial asset investment
(1) Security investment
□ Applicable √ Inapplicable
The Company did not invest in securities during the reporting period.
(2) Derivative investment
□ Applicable √ Inapplicable
The Company did not invest in derivatives during the reporting period.
6. Utilization of raised funds
□ Applicable √ Inapplicable
No raised funds were used by the Company during the reporting period.
7. Description of key projects not invested with raised funds
√ Applicable □ Inapplicable
Unit: RMB10,000
| Item name | Planned investment amount | Investment amount in the current reporting period | Actual accumulative investment amount as at the end of the reporting period | Project phase | Project income | Date of disclosure (if any) | Index of disclosure (if any) |
| Tangshan C&S Project | 32,700 | 1,292.57 | 7,563.92 | 23.13% | November 16, 2016 | 2016-50 | |
| Hubei C&S Project | 133,020 | 9,460.02 | 65,868.33 | 49.52% | 34,483.98 | December 31, 2016 | 2016-59 |
| Total | 165,720 | 10,752.59 | 73,432.25 | -- | -- | -- | -- |
VI. Major Asset and Equity Sales
1. Sales of major assets
□ Applicable √ Inapplicable
The Company did not sell major assets during the reporting period.
2. Sales of major equity
□ Applicable √ Inapplicable
VII. Analysis of Main Holding and Joint-stock Companies
√ Applicable □ Inapplicable
Main subsidiaries and joint-stock companies affecting more than 10% of the Company's net profit
Unit: RMB
| Company name | Company type | Main businesses | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Jiangmen C&S | Subsidiary | R&D, production, and sales (including online sales): Household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; and sales (including online sales) of Class I and II medical devices. (Business activities above are not restricted by the Special Administrative Measures for the Access of Foreign Investment) (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | RMB345,985,031 | 1,701,542,683.92 | 1,391,521,284.56 | 697,501,626.59 | 109,252,057.26 | 93,179,032.72 |
| Yunfu C&S | Subsidiary | R&D, production, wholesale, retail and online sales: High-end household paper series products, hygiene products, maternal and infant products, daily necessities, cosmetics, medical devices, hygiene materials, non-woven products, polymer materials and products, daily groceries, and sterilization supplies (excluding hazardous chemicals); import and export of goods or technologies (excluding the import and export of goods and | RMB650 million | 2,008,061,450.93 | 1,195,306,900.30 | 1,384,931,367.57 | 205,801,295.96 | 184,345,385.92 |
| technologies prohibited by the country or subject to administrative approval); and warehouse services (limited to warehouses qualified in fire protection without hazardous chemicals). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | ||||||||
| Sichuan C&S | Subsidiary | R&D, production, processing, and sales of hygiene products [tissues (paper)], baby products, daily necessities, non-woven products, and feminine hygiene products; export of self-produced products and import of necessary mechanical equipment, parts and accessories, and raw and auxiliary materials; and sales of daily chemical products, articles of daily use, medical devices, medical supplies, and sterilization supplies (excluding hazardous chemicals) [Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.] ] | RMB100 million | 1,089,874,387.94 | 748,997,486.20 | 857,316,535.93 | 102,940,900.21 | 86,792,873.64 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Inapplicable
Description of main holding and joint-stock companiesNoneVIII. Structured Entity Controlled by the Company
□ Applicable √ Inapplicable
IX. Prediction of Operating Results from January to September 2019Warning and explanation of the predication that the accumulated net profit from the beginning ofthe year to the end of the next reporting period may be negative or there will be large changescompared to the corresponding period of previous year
□ Applicable √ Inapplicable
X. Risks and Countermeasures
1. Risk of large fluctuations in pulp prices
The Company features a professional procurement team that collects professional data, assesses thefuture trend of pulp prices. Moreover, the team dynamically adjusts the inventory of pulp to ensurenormal production and respond to the international pulp market. At present, the Company hasdeveloped a global procurement network, covering multiple countries, such as Finland, Canada,Chile, Brazil, and China. Besides, it ensures stable procurement of raw materials by signinglong-term supply contracts with large-scale pulp suppliers embracing large production scale,abundant forest resources, and advanced production technologies.
2. Currency risk
(1) The Company closely observes the changes in the foreign exchange market. Additionally, itoffsets exchange losses arising from the RMB devaluation or bi-directional volatility by adjustingthe asset and liability structure of foreign currencies and reducing the total liabilities of foreigncurrencies.
(2) The Company has kept the account of foreign currency transactions at the selling rate sinceOctober 2015 in accordance with its actual demand and in line with foreign exchange requirements.It purchases foreign currencies at an appropriate rate to repay loans.
(3) The Company offsets and avoids currency risk through centralized management of foreignexchange funds, offsetting based on purchasing and payment, and hedging based on changes in theforeign exchange market and its actual development. In addition, it utilizes risk aversioninstruments like hedging to address currency risk exposure. It reasonably manages risks not for thesake of speculation.
3. Safe production risk
The Company has formulated strict fire protection policies for the warehouse management of rawmaterials and finished products and the placement and transfer of semi-finished products, equippedworkshops and warehouses with adequate fire protection equipment, and bought full insurance forrisky properties. Relevant responsible persons regularly inspect fire protection equipment to ensurethey are effective. Moreover, the Company offered safety education and training to its employees toavoid possible risks in production to the maximum extent.
Section V Important EventsI. Annual and Extraordinary General Meetings during the Reporting Period
1. General meeting of shareholders during the reporting period
| Sessions of meetings | Types of meetings | Proportion of attended investors | Date of meeting | Date of disclosure | Index of disclosure |
| 2020 First Extraordinary General Meeting | Extraordinary general meeting of shareholders | 59.84% | March 13, 2020 | March 14, 2020 | Announcement on Resolutions of 2020 First Extraordinary General Meeting of Shareholders (Announcement No.: 2020-15). See Securities Times (STCN, www.stcn.com), Securities Daily (www.zqrb.com), China Securities Journal (www.cs.com.cn), Shanghai Securities News (www.cnstock.com), and CNINFO (www.cninfo.com.cn) for details. |
| 2019 Annual General Meeting of Shareholders | Annual General Meeting | 55.09% | May 21, 2020 | May 22, 2020 | Announcement on Resolutions of 2019 Annual General Meeting of Shareholders (Announcement No.: 2020-34). See Securities Times (STCN, www.stcn.com), Securities Daily (www.zqrb.com), China Securities Journal (www.cs.com.cn), Shanghai Securities News (www.cnstock.com), and CNINFO (www.cninfo.com.cn) for details. |
| 2020 Second Extraordinary General Meeting of Shareholders | Extraordinary general meeting of shareholders | 53.75% | June 15, 2020 | June 16, 2020 | Announcement on Resolutions of 2020 Second Extraordinary General Meeting of Shareholders (Announcement No.: 2020-53). See Securities Times |
2. Request for extraordinary general meetings by preference shareholders with recoveredvoting rights
□ Applicable √ Inapplicable
II. Profit Distribution and Conversion of Capital Reserve to Share Capital during theReporting Period
□ Applicable √ Inapplicable
The Company plans not to distribute cash or share dividends or convert capital reserve to sharecapital semi-annually.III. Commitments Fulfilled by the De Facto Controller, Shareholders, Related Parties, andAcquirers of the Company during the Reporting Period and Commitments not Fulfilled byThem as at the End of the Reporting Period
√ Applicable □ Inapplicable
(STCN,www.stcn.com),Securities Daily(www.zqrb.com),China SecuritiesJournal(www.cs.com.cn),Shanghai SecuritiesNews(www.cnstock.com),and CNINFO(www.cninfo.com.cn)for details.
Commitments
| Commitments | Committed by | Type of commitment | Description | Time of commitment | Term of commitment | Fulfillment of commitment |
| Share reform commitment | ||||||
| Commitments in the acquisition report or the equity change report | ||||||
| Commitment made during asset restructuring | ||||||
| Commitments made during the initial public offering or refinancing | Directors, supervisors, and senior executives | Directors, supervisors, and senior executives promise that they will not transfer more than 25% of the total shares of the Company they hold each year during the term of office. If they leave office before the expiry of the term of office, they promise that they will not | November 25, 2010 | Long-term | Strictly observed |
| transfer more than 25% of the total shares of the Company they hold each year within the term of office and within six months after the term of office expires (which is agreed when they take office). Moreover, they will not transfer their shares of the Company within half a year after they leave office. | ||||||
| Equity incentive commitment | Dai Zhenji, Dong Ye, and Ye Longfang | They promise not to sell all their shares (including shares obtained from exercise and other shares) within six months after the end of the exercise of the last stock options. Besides, they will strictly conform to stock trading-related laws and regulations. | June 5, 2020 | During the implementation of the equity incentive plan | Strictly observed | |
| Other commitments to medium and small shareholders | Deng Guanbiao, Deng Guanjie, Deng Yingzhong, and Guangdong Zhongshun Paper Group Co., Ltd. | No competition with the Company in the same business | January 1, 2009 | Long-term | Strictly observed | |
| C&S Paper Co., Ltd. | Cash dividends shall be distributed when dividend conditions are met. The Board of Directors of the Company shall comprehensively consider industry characteristics, development stage, business model, profitability, and major capital spending (if any), distinguish the following circumstances, and follow the procedures stipulated in the Articles of Association, and propose differentiated cash dividend policies. | December 6, 2019 | Long-term | Strictly observed | ||
| Whether commitments are fulfilled on time | Yes | |||||
IV. Engagement and Dismissal of an Accounting FirmWhether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual report has not been audited yet.
V. Explanation by the Board of Directors and the Board of Supervisors of the "Non-standardAudit Report" for the Reporting Period Issued by the Accounting Firm
□ Applicable √ Inapplicable
VI. Explanation by the Board of Directors of the "Non-standard Audit Report" for Last Year
□ Applicable √ Inapplicable
VII. Bankruptcy Restructuring-related Matters
□ Applicable √ Inapplicable
No bankruptcy restructuring-related matters of the Company happened during the reporting period.VIII. LitigationsMaterial litigations and arbitrations
□ Applicable √ Inapplicable
The Company did not have major litigations or arbitrations during the reporting period.Other litigations
√ Applicable □ Inapplicable
| Basic information on litigations (arbitrations) | Amount involved (RMB10,000) | Whether projected liabilities were incurred | Litigation (arbitration) progress | Hearing results and influences of litigations (arbitrations) | Execution of judgment of litigations (arbitrations) |
| Zhongshan Trading sued Shenzhen Yongxinghua Trading Co., Ltd., Feng, & Liang for a sales contract dispute | 660.374109 | No | The first instance ruled that Zhongshan Trading won the case. The second instance has been heard. And Zhongshan Trading is waiting for the verdict. | The verdict of second instance has not been made. | Not applicable |
| Zhongshan Trading sued Guangzhou Yingjing Trade Co., Ltd. for a sales contract dispute | 31.3604 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict of first instance came into force. | The first round of execution ended. No properties have been recovered. |
| Zhongshan Trading sued Shaoyang Jiahe Trading Co., Ltd. for a sales contract dispute | 33.638552 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict of first instance came into force. Zhongshan Trading has applied for execution. | Ongoing |
| Zhongshan Trading sued Shanghai Tongli Trading Co., Ltd. and eight natural person defendants including Liu for a sales | 2932.009863 | No (Note: Whether projected liabilities will be incurred cannot be | The first instance ruled that Zhongshan Trading won the case. The second instance | The verdict of second instance has not been made. | Not applicable |
| contract dispute | determined prior to the verdict.) | has been heard. And Zhongshan Trading is waiting for the verdict. | |||
| Yin sued C&S for a dispute over the right to health | 30.247331 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance ruled that Zhongshan Trading won the case. The second instance has not been heard. And Zhongshan Trading is waiting for the verdict. | The verdict of second instance has not been made. | Not applicable |
| Sichuan Hua Xi Da Cheng Construction Co., Ltd. Zhuhai Branch sued Sichuan Luxian No. 9 Construction Engineering Co., Ltd. and Yunfu C&S for a contract dispute over the Yunfu C&S construction project | The original claim was RMB7,516,032.39, which was changed to RMB9,124,489.89 during the first instance. | Yes | The case was mediated and closed in the first instance. | All parties of the lawsuit fulfilled their respective obligation of settlement of the relevant project costs agreed in the contract. | The paper of civil mediation has been fulfilled. |
| Guangdong Weihong Plastics Technology Co., Ltd. sued Hubei C&S for a contractor contract dispute | 225.9055 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance ruled that Zhongshan Trading won the case. The second instance has not been heard. And Zhongshan Trading is waiting for the verdict. | The verdict of second instance has not been made. | Not applicable |
| Sichuan C&S sued Xi'an Minsheng Department Store Management Co., Ltd. for a contract dispute | 5.651847 | No | The case was mediated and closed in the first instance. | Xi'an Minsheng has not fulfilled the repayment obligation in line with the paper of civil mediation. | Sichuan C&S is applying for legal enforcement. |
| Zhongshan Trading sued Guangzhou Jv Se Mai Ke Internet Service Co., Ltd. for a sales contract dispute | 28.554681 | No | The first instance is being heard. Zhongshan Trading is waiting for the court session to open. | The verdict of first instance has not been made. | Not applicable |
| Xiaogan C&S sued Wuhan Xincheng Tongda Trading Co., Ltd. for a sales contract dispute | 525.162529 | No | The first instance is being heard. Zhongshan Trading is waiting for the court session to open. | The verdict of first instance has not been made. | Not applicable |
IX. Doubts from Media
□ Applicable √ Inapplicable
The Company did not have any matters that were generally doubted by media during the reportingperiod.X. Penalties and Remediation
□ Applicable √ Inapplicable
No penalties and remediation of the Company occurred during the reporting period.XI. Integrity Records of the Company and its Controlling Shareholder and De FactoController
□ Applicable √ Inapplicable
XII. Implementation of Stock Incentive Plan, Employee Stock Ownership Plan, and OtherEmployee Incentives of the Company
√ Applicable □ Inapplicable
1. 2018 stock option and restricted stock incentive plan
On December 18, 2018, at the ninth meeting of the fourth Board of Directors and the seventhmeeting of the fourth Board of Supervisors of the Company, 2018 Stock Option and RestrictedStock Incentive Plan of C&S Paper Co., Ltd. (Draft) and its summary, Proposal on the AppraisalManagement Measures of the Implementation of the Company's Restricted Stock Incentive Plan,and Proposal on Requesting the General Meeting of Shareholders to Authorize the Board ofDirectors to Handle Matters Related to Restricted Stock Incentive Plan, were reviewed andapproved respectively. The independent directors of the Company issued an independent opinion toagree that the equity incentive plan was conducive to the Company's sustainable development andthere was no situation that harms the Company and shareholders. The Board of Supervisors of theCompany verified the list of incentive recipients of the Company's equity incentive plan. Detailscan be found in the following documents published on December 19, 2018 on the designatedinformation disclosure media including Securities Times (STCN, www.stcn.com), China SecuritiesJournal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities News(www.cnstock.com) and Juchao Information Website (http://www.cninfo.com.cn): 2018 StockOption and Restricted Stock Incentive Plan (Draft), Summary of 2018 Stock Option and RestrictedStock Incentive Plan (Draft), List of Incentive Recipients of the Equity Incentive Plan, AppraisalManagement Measures of the Implementation of 2018 Stock Option and Restricted Stock IncentivePlan, Announcement on Resolutions of the Ninth Meeting of the Fourth Board of Directors(Announcement No. 2018-89) and Announcement on Resolutions of the Seventh Meeting of theFourth Board of Supervisors (Announcement No. 2018-90).
On January 8, 2019, at the Company's first extraordinary general meeting of 2019, 2018 StockOption and Restricted Stock Incentive Plan of C&S Paper Co., Ltd. (Draft) and its summary,Appraisal Management Measures of the Implementation of 2018 Stock Option and Restricted StockIncentive Plan of C&S Paper Co., Ltd., and Proposal on Requesting the General Meeting ofShareholders to Authorize the Board of Directors to Handle Matters Related to the Company's 2018Stock Option and Restricted Stock Incentive Plan, were reviewed and approved. The Board ofDirectors was authorized to determine the grant date of the incentive plan, grant stock options orrestricted stocks to the incentive recipients when the incentive recipients meet the conditions, andhandle all matters necessary for granting equity incentives. Details can be found in Announcementon Resolutions of the First Extraordinary General Meeting of 2019 (Announcement No. 2019-02),published on January 9, 2019 on the designated information disclosure media including SecuritiesTimes (STCN, www.stcn.com), China Securities Journal (www.cs.com.cn), Securities Daily(www.zqrb.com), Shanghai Securities News (www.cnstock.com) and Juchao Information Website(http://www.cninfo.com.cn).On March 1, 2019, at the tenth meeting of the fourth Board of Directors and the eighth meeting ofthe fourth Board of Supervisors of the Company, Proposal on Adjusting Matters Related to 2018Stock Option and Restricted Stock Incentive Plan and Proposal on Granting Stock Options andRestricted Stocks to Incentive Recipients, were reviewed and approved respectively. The Company'sBoard of Directors adjusted the grantees and the number of stock options granted of 2018 StockOption and Restricted Stock Incentive Plan in conformity with the authorization of the generalmeeting of shareholders, and determined the first grant date of stock options and restricted stocks asMarch 1, 2019. 13,734,500 stock options were granted to 3,118 eligible incentive recipients, and19,675,500 restricted stocks were granted to 569 incentive recipients. Details can be found in thefollowing documents published on March 2, 2019 on the designated information disclosure mediaincluding Securities Times (STCN, www.stcn.com), China Securities Journal (www.cs.com.cn),Securities Daily (www.zqrb.com), Shanghai Securities News (www.cnstock.com) and JuchaoInformation Website (http://www.cninfo.com.cn): Announcement on Resolutions of the TenthMeeting of the Fourth Board of Directors (Announcement No.: 2019-09), Announcement onAdjusting Matters Related to 2018 Stock Option and Restricted Stock Incentive Plan(Announcement No.: 2019-11), Announcement on Granting Stock Options and Restricted Stocks toIncentive Recipients (Announcement No. 2019-12), List of Incentive Recipients of the EquityIncentive Plan (Grant Date), and Legal Opinion of Kingson Law Firm on the Adjustment and FirstGranting of the Company's 2018 Stock Option and Restricted Stock Incentive Plan.On September 11, 2019, at the 16th meeting of the fourth Board of Directors and the 14th meetingof the fourth Board of Supervisors of the Company, Proposal on Adjusting Matters Related to 2018Stock Option and Restricted Stock Incentive Plan and Proposal on Granting Reserved StockOptions and Restricted Stocks to Incentive Recipients, were reviewed and approved. The Board ofDirectors of the Company adjusted the number of stock options reserved in the incentive plan from
2.5 million to 2.4 million in conformity of the authorization of the general meeting of shareholders.And it was scheduled to grant 2.4 million reserved stock options to 114 eligible incentive recipientsand 3.5 million reserved restricted stock shares to 64 incentive recipients on September 11, 2019.Details can be found in the following documents published on September 12, 2019 on thedesignated information disclosure media including Securities Times (STCN, www.stcn.com), ChinaSecurities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities News(www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Announcement on Resolutions ofthe 16th Meeting of the Fourth Board of Directors (Announcement No.: 2019-61), Announcementon Adjusting Matters Related to 2018 Stock Option and Restricted Stock Incentive Plan(Announcement No.: 2019-64), Announcement on Granting Reserved Stock Options and RestrictedStocks to Incentive Recipients (Announcement No. 2019-65), List of Incentive Recipients of the
Equity Incentive Plan (Grant Date), and Legal Opinion of Kingson Law Firm on the Company'sAdjustment of 2018 Stock Option and Restricted Stock Incentive Plan and the Granting of ReservedParts.On October 28, 2019, the registration for the grant of reserved parts of 2018 Stock Option andRestricted Stock Incentive Plan was completed. The reserved stock options shall be registered onOctober 30, 2019, and the reserved restricted stocks shall be listed on October 30, 2019.On May 21, 2020, at the 23rd meeting of the fourth Board of Directors and the 19th meeting of thefourth Board of Supervisors, Proposal on the Achievement of Unlock Conditions of the First UnlockPeriod of Restricted Stock for the First Time under the Company's 2018 Stock Option andRestricted Stock Incentive Plan, Proposal on the Achievement of Exercise Conditions of the FirstExercise Period of Stock Option for the First Time under the Company's 2018 Stock Option andRestricted Stock Incentive Plan, Proposal on the Achievement of Exercise Conditions of the FirstExercise Period of Stock Option for the First Time under the Company's 2018 Stock Option andRestricted Stock Incentive Plan, and Proposal on the Repurchase and Deregistration of PartialRestricted Stock for the First Time under the Company's 2018 Stock Option and Restricted StockIncentive Plan were reviewed and approved. In conformity with Draft of 2018 Stock Option andRestricted Stock Incentive Plan, the Board of Directors considered that the first unlock/exerciseperiod unlock/exercise conditions of the restricted stock/stock option granted for the first time hadbeen fulfilled. There were 533 holders of restricted stocks meeting the unlock conditions, and thenumber of stocks that could be unlocked was 5,593,428, accounting for 0.43% of the Company'stotal share capital; There were 2,522 holders of stock options meeting the exercise conditions, andthe number of options that could be exercised was 3,431,505, accounting for 0.26% of theCompany's total share capital. In addition, a total of 802,722 restricted stocks of 241 incentiverecipients that did not meet the unlock conditions were repurchased and deregistered. A total of2,110,545 stock options of 1,594 incentive subjects who did not meet the exercise conditions werecanceled. Details can be found in the relevant announcements published on May 22, 2020 on thedesignated information disclosure media including Securities Times (STCN, www.stcn.com), ChinaSecurities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities Newsand CNINFO (http://www.cninfo.com.cn).On June 15, 2020, the Company was in the process of completing the deregistration of the partialstock options granted for the first time that had been granted but not exercised.Please continue to pay attention to the Company's information disclosure for subsequentimplementation progress or changes.
2. Phase II employee stock ownership plan
At the Company's 14th meeting of the fourth Board of Directors on July 9, 2019, and theCompany's second extraordinary general meeting of 2019 on July 26, 2019, Proposal on Phase IIEmployee Stock Ownership Plan (Draft) and its summary (hereinafter referred to as "Phase IIEmployee Stock Ownership Plan") was reviewed and approved. Details can be found in the relevantannouncements published on the designated information disclosure media including CNINFO(www.cninfo.com.cn), China Securities Journal (www.cs.com.cn), Shanghai Securities News(www.cnstock.com), Securities Times (STCN, www.stcn.com) and Securities Daily(www.zqrb.com).On November 11, 2019, at the 18th meeting of the fourth Board of Directors of the Company,Proposal on Revising Phase II Employee Stock Ownership Plan (Draft) and its summary wasreviewed and approved. The Company planned to revise some clauses in Phase II Employee StockOwnership Plan (Draft) and its summary in conformity with the market allocation situation. Details
can be found in the relevant announcements published on the designated information disclosuremedia including CNINFO (www.cninfo.com.cn), China Securities Journal (www.cs.com.cn),Shanghai Securities News (www.cnstock.com), Securities Times (STCN, www.stcn.com) andSecurities Daily (www.zqrb.com).As at November 29, 2019, all the repurchased stocks held in the "C&S Paper Co., Ltd. RepurchaseSpecial Securities Account" opened by the Company had been transferred to the "C&S Paper Co.,Ltd. - Phase II Employee Stock Ownership Plan" special account. Details can be found inAnnouncement on Completion of Non-Transaction Transfer of Phase II Employee Stock OwnershipPlan (Announcement No. 2019-85) published on the designated information disclosure mediaincluding CNINFO (www.cninfo.com.cn), China Securities Journal (www.cs.com.cn), ShanghaiSecurities News (www.cnstock.com), Securities Times (STCN, www.stcn.com) and Securities Daily(www.zqrb.com).In conformity with Accounting Standards for Enterprises No.11–Share-based Payments andrelevant application guidelines and other documents, the Company's Phase II Employee StockOwnership Plan meets the definition of share-based payment, and the total share-based paymentexpenses incurred were RMB56.44 million, of which RMB4.7 million were allocated in 2019, andRMB51.74 million in 2020.Please continue to pay attention to the Company's information disclosure for subsequentimplementation progress or changes.XIII. Material Related Party Transaction
1. Related party transaction relevant to daily operations
√ Applicable □ Inapplicable
| Party of related party transaction | Connected relation | Type of related party transaction | Content of related party transactions | Pricing rules of related party transactions | Price of related party transactions | Amount of related party transactions (RMB10,000) | Proportion in the amount of similar transactions | Approved transaction limit (RMB10,000) | Whether to outstrip the approved limit | Settlement of related party transaction | Available market prices for similar transactions | Date of disclosure | Index of disclosure |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Leases | Rental | Market fair price | Market fair price | 147.4 | 42.17% | 589.62 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor | Routine operation transaction | Sale of goods | Market fair price | Market fair price | 82.87 | 0.02% | 300 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor | Routine operation transaction | Sale of goods | Market fair price | Market fair price | 18.08 | 0.00% | 100 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Chongqing Qinyue Trading Co., Ltd. | A company where the senior manager Yue Yong's brother holds shares and serves as a supervisor | Routine operation transaction | Sale of goods | Market fair price | Market fair price | 24.8 | 0.01% | 240 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Guangdong | Controlling | Routine | Sale of | Market fair | Market fair | 5.66 | 0.002% | Yes | Transfer | Market fair |
| Zhongshun Paper Group Co., Ltd. | shareholder | operation transaction | goods | price | price | settlement | price | ||||||
| Total | -- | -- | 278.81 | -- | 1,229.62 | -- | -- | -- | -- | -- | |||
| Details of returns of large sales | Not applicable | ||||||||||||
| Estimation of the total amount of daily related party transactions that will occur in the current period by category, and the actual performance during the reporting period (if any) | The excess related party transaction amount of RMB56,600 is the Company's business of selling mask products to related parties, and it is a temporary new related sale in 2020. It falls within the authority of the chairman of the Company and can be implemented without the approval of the Board of Directors. | ||||||||||||
| Reason(s) for a large difference between the transaction price and the market reference price (if applicable) | Exercise at fair price | ||||||||||||
2. Related party transactions of acquisition and sale of assets or equity
□ Applicable √ Inapplicable
During the reporting period, there was no related party transaction of acquisition and sale of assetsor equity.
3. Related party transactions of joint outbound investment
□ Applicable √ Inapplicable
During the reporting period, there was no related party transaction of joint outbound investment.
4. Related party transactions of creditor's rights and debts
√ Applicable □ Inapplicable
Whether there was non-operating related party transaction of creditor's rights and debts
□ Yes √ No
During the reporting period, there was no non-operating related party transaction of creditor's rightsand debts.
5. Other material related party transactions
□ Applicable √ Inapplicable
During the reporting period, there was no other material related party transactions.XIV. Misappropriation of Funds for Non-operating Purposes by Controlling Shareholdersand Related Parties
□ Applicable √ Inapplicable
During the reporting period, there was no misappropriation of funds for non-operating purposes bycontrolling shareholders and related parties.XV. Material Contracts and Their Performance
1. Custody, contract and lease
(1) Custody
□ Applicable √ Inapplicable
During the reporting period, there was no custody.
(2) Contract
□ Applicable √ Inapplicable
During the reporting period, there was no contract.
(3) Lease
√ Applicable □ Inapplicable
Lease statementOn December 5, 2019, the Company at the 19th meeting of the fourth Board of Directors approvedthe Proposal on Daily Related Party Transactions. Due to the needs of operation and business, the
Company and its wholly-owned subsidiary, Zhongshan Zhongshun Trading Co., Ltd., leased thereal estate jointly owned by Mr. Deng Yingzhong, the actual controller, Mr. Deng Guanbiao and Mr.Deng Guanjie. The lease term is from January 1, 2020 to December 31, 2021, and the related partytransaction involves RMB5,896,200. During the consideration of this proposal, the Company's threerelated directors, Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew fromvoting, while the remaining six attending directors unanimously approved this related transaction.The three independent directors of the Company respectively issued Prior Approval Opinions andOpinions of Independent Directors on the proposal, agreeing to submit the proposal to the Board ofDirectors for deliberation and agreeing to the related party transaction.Projects whose profits or losses brought to the Company reached more than 10% of the total profitsof the Company during the reporting period
□ Applicable √ Inapplicable
During the reporting period, there was no leasing projects whose profits or losses brought to theCompany reached more than 10% of the total profits of the Company during the reporting period.
2. Material guarantee
√ Applicable □ Inapplicable
(1) Guarantee
Unit: RMB10,000
| The overseas guarantee of the company and its subsidiaries (guarantee to subsidiaries is not included). | ||||||||
| Name of the borrower | Disclosure date of relevant announcements of guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| The company's guarantee to its subsidiaries | ||||||||
| Name of the borrower | Disclosure date of relevant announcements of guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Zhongshun Trading Co., Ltd. | December 19, 2018 | 15,000 | October 22, 2019 | 12,323.09 | Joint and several liability guarantee | October 22, 2019-August 27, 2022 | No | Yes |
| Zhongshun Trading Co., Ltd. | December 5, 2019 | 15,000 | April 14, 2020 | 19.92 | Joint and several liability guarantee | April 14, 2020-October 23, 2022 | No | Yes |
| Zhongshun Trading Co., Ltd. | December 19, 2018 | 15,000 | December 5, 2019 | 1,106.48 | Joint and several liability guarantee | December 6, 2019-December 5, 2022 | No | Yes |
| Zhongshun Trading Co., Ltd. | December 19, 2018 | 20,000 | June 6, 2019 | 1,076.66 | Joint and several liability guarantee | June 6, 2019-June 6, 2024 | No | Yes |
| Zhongshun Trading Co., Ltd. | December 15, 2017 | 10,000 | November 19, 2018 | 0 | Joint and several liability | November 19, 2018-November 18, 2022 | No | Yes |
| guarantee | ||||||||
| Jiangmen C&S | December 19, 2018 | 12,000 | October 22, 2019 | 2,345.35 | Joint and several liability guarantee | October 22, 2019-August 27, 2022 | No | Yes |
| Jiangmen C&S | December 15, 2017 | 10,000 | March 27, 2018 | 0 | Joint and several liability guarantee | March 27, 2018-December 31, 2023 | No | Yes |
| Jiangmen C&S | December 19, 2018 | 7,000 | May 5, 2019 | 3,470.36 | Joint and several liability guarantee | May 5, 2019-August 5, 2021 | No | Yes |
| Jiangmen C&S | December 19, 2018 | 10,000 | July 1, 2019 | 1,284.87 | Joint and several liability guarantee | July 1, 2019-June 30, 2022 | No | Yes |
| Jiangmen C&S | December 15, 2017 | 16,000 | May 30, 2018 | 0 | Joint and several liability guarantee | May 30, 2018-May 30, 2023 | No | Yes |
| Yunfu C&S | December 5, 2019 | 8,000 | April 14, 2020 | 0 | Joint and several liability guarantee | April 14, 2020-April 14, 2028 | No | Yes |
| Hubei C&S | December 5, 2019 | 10,000 | February 25, 2020 | 0 | Joint and several liability guarantee | February 25, 2020-December 4, 2025 | No | Yes |
| Hubei C&S | December 5, 2019 | 10,000 | June 3, 2020 | 9,000 | Joint and several liability guarantee | June 3, 2020-May 29, 2023 | No | Yes |
| Jiangmen C&S, Yunfu C&S, Hubei C&S | December 19, 2018 | 25,000 | January 8, 2019 | 1,138.7 | Joint and several liability guarantee | January 8, 2019-January 8, 2021 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 19, 2018 | 21,247.5 | September 2, 2019 | 13,551.77 | Joint and several liability guarantee | September 2, 2019-July 31, 2023 | No | Yes |
| C&S Hong Kong, Zhong Shun International | December 5, 2019 | 18,550.14 | March 20, 2020 | 8,094.24 | Joint and several liability guarantee | March 20, 2020-September 19, 2022 | No | Yes |
| C&S Hong Kong, Macao C&S | December 5, 2019 | 38,000 | February 17, 2020 | 24,830 | Joint and several liability guarantee | February 17, 2020-December 23, 2022 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 5, 2019 | 44,973.88 | February 12, 2020 | 30,696.43 | Joint and several liability guarantee | February 12, 2020-February 12, 2022 | No | Yes |
| C&S Hong Kong, | December 5, 2019 | 14,165 | February 25, 2020 | 1,965.89 | Joint and several | February 25, 2020-February | No | Yes |
| Macao C&S | liability guarantee | 25, 2022 | ||||||
| C&S Hong Kong, Macao C&S | December 19, 2018 | 7,082.5 | September 16, 2019 | 0 | Joint and several liability guarantee | September 16, 2019-January 13, 2023 | No | Yes |
| C&S Hong Kong, Macao C&S | December 5, 2019 | 16,998 | March 27, 2020 | 4,934.61 | Joint and several liability guarantee | March 27, 2020-February 19, 2022 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 15, 2017 | 19,738.08 | September 28, 2018 | 8,489.41 | Joint and several liability guarantee | September 28, 2018-August 31, 2022 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 5, 2019 | 21,247.5 | January 30, 2020 | 18,259.7 | Joint and several liability guarantee | January 30, 2020-January 30, 2022 | No | Yes |
| Macao C&S | December 15, 2017 | 7,790.75 | March 23, 2018 | 808.21 | Joint and several liability guarantee | March 23, 2018-September 23, 2021 | No | Yes |
| Macao C&S | December 15, 2017 | 7,000 | August 15, 2018 | 2,379.72 | Joint and several liability guarantee | August 15, 2018-August 15, 2025 | No | Yes |
| C&S Hong Kong | December 15, 2017 | 10,623.75 | April 9, 2018 | 7,899.95 | Joint and several liability guarantee | April 9, 2018-January 24, 2020 | No | Yes |
| Total approved amount of guarantee for subsidiaries during the reporting period (B1) | 196,934.52 | Total actual amount of guarantee for subsidiaries during the reporting period (B2) | 97,800.79 | |||||
| Total approved amount of guarantee for subsidiaries at the end of the reporting period (B3) | 410,417.1 | Total actual guarantee balance to subsidiaries at the end of the reporting period (B4) | 153,675.36 | |||||
| The guarantee of subsidiaries to subsidiaries | ||||||||
| Name of the borrower | Disclosure date of relevant announcements of guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Total amount of the Company's guarantee (the sum of the first three items) | ||||||||
| Total approved amount of guarantee during the reporting period (A1 + B1 + C1) | 196,934.52 | Total actual amount of guarantee during the reporting period (A2 + B2 + C2) | 97,800.79 | |||||
| Total approved amount of guarantee at the end of the reporting period (A3 + B3 + C3) | 410,417.1 | Total actual guarantee balance at the end of the reporting period (A4 | 153,675.36 | |||||
| + B4 + C4) | ||
| Proportion of the total actual amount of guarantee (A4 + B4 + C4) in the net assets of the Company | 33.91% | |
| Wherein: | ||
| The balance of guarantee for shareholders, actual controllers and their related parties (D) | 0 | |
| The balance of debt guarantee provided directly or indirectly for the borrower whose asset-liability ratio exceeds 70% (E) | 45,788.42 | |
| The amount of guarantee in excess of 50% of net assets (F) | 0 | |
| Total amount of the above three guarantees (D + E + F) | 45,788.42 | |
| Statements of the fact that the guarantee liability has occurred or may be jointly and severally liable for the unexpired guarantee during the reporting period (if any) | None | |
| Statements of providing external guarantee in violation of prescribed procedures (if any) | None | |
(2) External guarantee in violation of prescribed procedures
□ Applicable √ Inapplicable
During the reporting period, there was no external guarantee in violation of prescribed procedures.
3. Entrusted WM
√ Applicable □ Inapplicable
Unit: RMB10,000
| Specific types | Sources of entrusted WM funds | Incurred amount of entrusted WM | Undue balance | The amount overdue but not recovered |
| Banking WM product | Self-owned fund | 21,240 | 21,240 | 0 |
| Total | 21,240 | 21,240 | 0 | |
Specific situations of high-risk entrusted WM with individually significant amounts or low safety,poor liquidity and no principal guarantee
□ Applicable √ Inapplicable
Entrusted WM is expected to fail to recover the principal or there are other circumstances that maylead to impairment
□ Applicable √ Inapplicable
4. Other major contracts
□ Applicable √ Inapplicable
During the reporting period, there was no other major contracts.
XVI. Social Responsibility
1. Major environmental issues
Whether listed companies and the subsidiaries are the key pollution discharge units published by thedepartment of environmental protectionYes
| Company/subsidiary name | Names of main pollutants and particular pollutants | Ways of discharge | Number of discharge outlets | Distribution of discharge outlets | Concentration of discharge | Implemented pollutant discharge standards | Total discharge | Total approved discharge | Excessive discharge | |
| Jiangmen Zhongshun Paper Co., Ltd. | Waste water | COD | After treatment, it is discharged to the sewage treatment plant | 1 | Centralized processing facilities in the factory | 141.5 mg/L | ≤200 mg/L | 144.59 t | 335.600 t/a | None |
| Ammonia nitrogen | 5.35 mg/L | ≤8 mg/L | 2.65 t | 13.4 t/a | None | |||||
| C&S (Sichuan) Paper Co., Ltd. | Waste water | COD | After treatment, it enters the water purification station through urban sewage pipeline | 1 | Production waste water discharge (DW001) flows through the channel into the main outlet DW002 (confluent with domestic waste water) | 33 mg/L | ≤80 mg/L | 13.8626 t | 96 t/a | None |
| Ammonia nitrogen | 0.496 mg/L | ≤8 mg/L | 0.2084 t | 9.6 t/a | None | |||||
| Waste gas | PM (particulate matter) | Discharge directly through the flue | 4 | Four chimneys (one spare) | 1#furnace 9.8 mg/m? 3#furnace 3.6 mg/m? 4#furnace 3.2 mg/m? | ≤20 mg/m? | 1#furnace 0.1634 t 3#furnace 0.1160 t 4#furnace 0.1684 t | 5.6088 t/a | None | |
| Nitrogen oxide | 1#furnace 107 mg/m? 3#furnace 81 mg/m? 4#furnace 83 mg/m? | ≤150 mg/m? | 1#furnace 1.8100 t 3#furnace 2.5625 t 4#furnace 2.8129 t | 42.022 t/a | None | |||||
| Sulfur dioxide | 0 | ≤50 mg/m? | 0 | 0.44 t/a | None | |||||
| Zhejiang Zhongshun Paper Co., Ltd. Co., Ltd. | Waste water | COD | After treatment, it is discharged to Jiaxing Union Sewage Treatment Co., Ltd. through municipal pipe | 1 | Centralized processing facilities in the factory | 33.28 mg/L | ≤500 mg/L | 3.15 t | 13.97 t/a | None |
| Ammonia nitrogen | 1.92 mg/L | ≤35 mg/L | 0.18 t | 9.78 t/a | None | |||||
| C&S (Hubei) Paper Co., Ltd. | Waste water | COD | After treatment, it is discharged to Biquan Sewage Treatment Plant through municipal | 1 | After pre-processing of centralized processing facilities in the factory, it is discharged to Biquan Sewage Treatment Plant | 56.99 mg/L | ≤400 mg/L | 22.23 t | 152.25 t/a | None |
| Ammonia nitrogen | 1.151 mg/L | ≤30 mg/L | 0.639 t | 15.25 t/a | None | |||||
| pipe | ||||||||||
| Waste gas | PM (particulate matter) | Dedusting by bag filter, desulfurization by limestone-gypsum and denitration by SNCR | 1 | One chimney | 5.09 mg/m? | 30 mg/Nm3 | 6.488 t | / | None | |
| Sulfur dioxide | 23.07 mg/m? | 200 mg/Nm3 | 23.7 t | 203.87 t/a | None | |||||
| Nitrogen oxide | 48.91 mg/m? | 200 mg/Nm3 | 61.515 t | 239.85 t/a | None | |||||
| C&S (Yunfu) Paper Co., Ltd. | Waste water | COD | Continuous discharge | 1 | Sewage treatment station in the factory | 30.46 mg/L | ≤80 mg/L | 33.54 t | 197.1 t/a | None |
| Ammonia nitrogen | Continuous discharge | 1 | Sewage treatment station in the factory | 1.043 mg/L | ≤8 mg/L | 2.65 t | 19.76 t/a | None | ||
| C&S Paper Co., Ltd. Tangshan Branch | Waste water | COD | After being treated by the plant sewage treatment station, it is discharged to the Lvyuan Sewage Treatment Plant in the zone | 1 | The main outlet of the zone (Lvyuan Sewage Treatment Plant) | 28.94 mg/L | ≤50 mg/L | 1.85 t | 16.5 t/a | None |
| Ammonia nitrogen | 0.62 mg/L | ≤5 mg/L | 0.04 t | 1.65 t/a | None | |||||
| Waste gas | PM (particulate matter) | Discharge directly through the flue | 1 | One chimney | 2.06 mg/m? | ≤5 mg/m? | 0.053 t | 2.46 t/a | None | |
| Nitrogen oxide | 16.38 mg/m? | ≤30 mg/m? | 0.419 t | 18.46 t/a | None | |||||
| Sulfur dioxide | 3.09 mg/m? | ≤10 mg/m? | 0.078 t | 6.15 t/a | None |
Construction and operation of pollution prevention and control facilities
(1) Compliance obligations fulfillment: the Company and its subsidiaries strictly abide by nationaland local environmental laws and regulations; all new projects strictly implement the environmentalimpact assessment system and "Three simultaneous" system; all production activities strictlycomply with the Environmental Protection Law of the People's Republic of China, the Law of thePeople's Republic of China on the Prevention and Control of Water Pollution, the Law of thePeople's Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of thePeople's Republic of China on the Prevention and Control of Environmental Pollution by SolidWaste and the Action Plan for Prevention and Control of Water Pollution, and ensure all pollutanttreatment and discharge in line with the requirements of laws and regulations.
(2) Configuration and operation of water treatment equipment and facilities: Each subsidiary has acomplete set of environmental protection treatment equipment and facilities. The main sewagetreatment processes are anaerobic, aerobic and subsequent deep treatment processes, which canachieve the discharge standards of various sewage indicators. In addition, each subsidiary isequipped with a recycling water system, in which the reclaimed water that meets the usage standardis used for re-production to reduce the discharge of sewage as far as possible. The sewage ofJiangmen, Zhejiang, Hubei and Tangshan companies is discharged after centralized treatment in theCompany and treated by the local sewage treatment plants. After centralized treatment in theCompany, the sewage of Sichuan Company enters water purification station through urban sewagepipeline; the sewage of Yunfu Company, after treated by the company's sewage treatment stationand reaching the standard, is discharged organically.
(3) On-line monitoring and operation of water treatment facilities: Four subsidiaries in Yunfu,Sichuan, Zhejiang and Hubei have all installed on-line sewage monitoring facilities, which aredirectly supervised by local Environmental Protection Bureau. The sewage of Tangshan Company,after centralized treatment in the Company, is discharged to the sewage plant of the local paperindustry base without any other sewage outlet. Monitoring facilities are installed in the company forinternal control reference. After the centralized treatment within the Company, the sewage ofJiangmen Company is discharged to the sewage plant of the local paper industry base. There is noother sewage outlet and no on-line monitoring facilities. The Environmental Protection Bureau goesto the company regularly every quarter to compare the on-line monitoring data, which all meet therequirements.
(4) Boiler waste gas emission: Sichuan Branch and Tangshan Branch are equipped with natural gasboilers. Hubei Branch is equipped with a coal-fired boiler, and waste gas is emitted uniformly afterdesulfurization and denitrification. Boiler waste gas emission conforms to GB13271-2014 EmissionStandard of Air Pollutants for Boiler.Environmental impact assessment of construction projects and other administrative permits forenvironmental protection
(1) Administrative permits: According to the Measures for the Administration of PollutantDischarge Permit of the Ministry of Environmental Protection of the People's Republic of China,the applications were submitted to the Environmental Protection Bureau. All the subsidiaries'permissions would expire in 2020 and they all applied for the extension on time in accordance withthe regulations.
(2) Construction projects: the Company has always been strictly in accordance with environmentallaws and regulations to implement the control of construction projects. Environmental impactassessment was carried out for all construction projects and environmental protection projectconstruction was arranged according to construction plan, to ensure that the environmental
protection facilities and the main project are designed, constructed and put into use at the same time.At present, all construction projects put into production have completed environmental impactassessment and acceptance and approval.
Emergency plan for sudden environmental events
(1) Preparation and reporting of emergency plan for sudden environmental events: The Companystrictly implements emergency rules for sudden environmental events, and according to thetechnical requirements in the Technical Guidelines for Preparation of Emergency Plans forEnvironmental Pollution Accidents employs a professional advisory and guidance organization toformulate the Emergency Plan for Sudden Environmental Events, which has been reviewed andfiled by the Environmental Protection Bureau.
(2) Emergency supplies, training and drill: The Company has matched the correspondingemergency supplies according to the requirements of the Emergency Plan for SuddenEnvironmental Events. Emergency measures for hazardous chemicals have been prepared accordingto environmental protection requirements, and necessary labor protection supplies and emergencysupplies have been provided in accordance with safety technical instructions, and checked andupdated regularly. The Company regularly carries out emergency training and drill and suitabilityassessment of emergency plan to ensure the effectiveness and enforceability of emergency plan.Environmental self-monitoring program
(1) Self-monitoring ledger: The Company strictly abides by laws and regulations, carries outself-monitoring work in accordance with environmental protection requirements, establishesenvironmental management ledger and data, and constantly improves it.
(2) Waste water monitoring: At present, self-monitoring is a combination of manual monitoring andautomatic monitoring, and qualified units are entrusted to carry out monitoring regularly. Automaticmonitoring projects: main discharge outlet of waste water (COD, ammonia nitrogen, flow rate, PH,total nitrogen); Manual monitoring projects: daily monitoring of COD, BOD, ammonia nitrogen, SS,chroma, PH, total phosphorus and total nitrogen indicators; other sewage monitoring projects,uncontrolled emissions, solid waste and factory boundary noise; each subsidiary entrusts qualifiedunits to carry out monitoring work on a monthly or quarterly basis according to the localenvironmental protection requirements.
(3) Waste gas monitoring: the main testing items are nitrogen oxide, ringelman emittance, sulfurdioxide and soot. The testing frequency is in compliance with the requirements of regulations.
(4) The self-monitoring data of pollutant discharge and environmental monitoring plans of eachsubsidiary are disclosed on the national key pollution source information disclosure website and theprovincial key pollution source information disclosure website.
Other environmental information that should be disclosed
(1) The information of pollution discharge permit and relevant environmental information requiredby pollution permits shall be published on the National Pollution Discharge Permit ManagementInformation Platform. If the competent government department in the location of the subsidiary hasspecific requirements, the information shall be published on its required environmental informationplatform in local area.
(2) Other information related to environmental protection shall be published in the “News” section
of our website.
Other relevant information on environmental protectionNone
2. Performance of social responsibility for targeted poverty alleviation
(1) Targeted poverty relief planning
The Company carried out targeted poverty alleviation in the first half of 2020, and the followingwork plan will be carried out in accordance with the Company’s situation and work arrangement.
(2) Summary of semi-annual targeted poverty alleviation
In order to implement General Secretary Xi Jinping’s important guidance that poverty alleviationand development should be precise and non-public enterprises are encouraged to participate inpoverty alleviation by taking a turnkey approach in terms of resources, we have actively respondedto the government’s appeal in the first half of 2020, fulfilled corporate social responsibility, andprovided financial and material assistance to poor areas. Targeted poverty alleviation work:
1. We have fulfilled corporate social responsibility by participating in the activity of “Assistance inpandemic fighting, love never stop spreading”, and donating 10,000 masks, disinfectant,disinfection powder, protective clothing and other pandemic prevention materials to YunmengCounty of Xiaogan City, which totally worth RMB35,000.
2. The Company has participated in the “Guangdong Poverty Alleviation Day” in Luoding City,Guangdong Province and donated RMB100,000 in cash.
(3) Targeted poverty relief achievements
| Indicator | Unit of measurement | Amount and description |
| I. Overall Situation | - | - |
| Including: 1. Capital | RMB10,000 | 10 |
| 2. Money equivalent of supplies | RMB10,000 | 3.5 |
| II. Investments by Items | - | - |
| 1. Poverty alleviation initiatives to promote industry development | - | - |
| 2. Poverty alleviation initiatives to transfer employment | - | - |
| 3. Poverty alleviation initiatives to relocate impoverished residents | - | - |
| 4. Poverty alleviation initiatives to promote education | - | - |
| 5. Poverty alleviation initiatives to promote healthcare | - | - |
| 6. Poverty alleviation initiatives to promote ecological protection | - | - |
| 7. Poverty alleviation initiatives to strengthen security guarantee | - | - |
| 8. Poverty alleviation initiatives to promote social causes | - | - |
| 8.2 Amount of targeted poverty relief input | RMB10,000 | 13.5 |
| 9. Other projects | - | - |
| III. Awards (including Content and Level) | - | - |
(4) Subsequent targeted poverty alleviation plan
The following work plan will be carried out in accordance with the Company’s situation and workarrangement.XVII. Statement on Other Significant Events
√ Applicable □ Inapplicable
| No. | Announcement time | Announcement name | Announcement number | Disclosure media |
| 1 | January 9, 2020 | Pre-disclosure Announcement on Share Reduction Plan for Directors and Senior Officers of the Company | January 2020 | Securities Times (STCN, www.stcn.com) (STCN, www.stcn.com), Securities Daily (www.zqrb.com), China Securities Journal (www.cs.com.cn), Shanghai Securities News (www.cnstock.com), and CNINFO (www.cninfo.com.cn) |
| 2 | February 3, 2020 | Announcement on Resolutions of the 20th Meeting of the Fourth Board of Directors | February 2020 | |
| 3 | February 3, 2020 | Announcement on External Donations | March 2020 | |
| 4 | February 10, 2020 | Announcement on the Production and Sale of Medical Masks by Wholly-owned Subsidiaries | April 2020 | |
| 5 | December 2, 2020 | May 2020 | ||
| 6 | February 13, 2020 | Announcement on the Acquisition of Emergency Medical Device Production and Emergency Medical Device Record Certificate by Wholly-owned Subsidiaries | June 2020 | |
| 7 | February 15, 2020 | Progress Announcement on Share Reduction Plan for Directors and Senior Officers of the Company | 2020-07 | |
| 8 | February 26, 2020 | Announcement on Resolutions of the 21st Meeting of the Fourth Board of Directors | 2020-08 | |
| 9 | February 26, 2020 | Announcement on Resolutions of the 17th Meeting of the Fourth Board of Supervisors | 2020-09 | |
| 10 | February 26, 2020 | Announcement on Changes to Accounting Policies | 2020-10 | |
| 11 | February 26, 2020 | Notice on Holding 2020 First Extraordinary General Meeting | 2020-11 | |
| 12 | February 29, 2020 | 2019 Annual Performance Bulletin | 2020-12 | |
| 13 | March 6, 2020 | Completion Announcement on Share Reduction Plan for Senior Managers of the Company | 2020-13 | |
| 14 | March 11, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-14 | |
| 15 | March 14, 2020 | Announcement on Resolutions of 2020 First Extraordinary General Meeting of Shareholders | 2020-15 | |
| 16 | March 18, 2020 | Announcement on the Resignation of Representatives of Securities Affairs | 2020-16 | |
| 17 | March 20, 2020 | Announcement on the First Repurchase of Company Shares | 2020-17 | |
| 18 | March 21, 2020 | Announcement on the Progress of Repurchase of Company Shares | 2020-18 | |
| 19 | March 31, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of the Company and Partially-owned Subsidiaries | 2020-19 | |
| 20 | April 3, 2020 | Announcement on the Progress of Repurchase of Company Shares | 2020-20 |
| 21 | April 8, 2020 | Pre-disclosure Announcement on Share Reduction Plan for Directors and Senior Officers of the Company | 2020-21 |
| 22 | April 30, 2020 | Announcement on Resolutions of the 22nd Meeting of the Fourth Board of Directors | 2020-22 |
| 23 | April 30, 2020 | Announcement on Resolutions of the 18th Meeting of the Fourth Board of Supervisors | 2020-23 |
| 24 | April 30, 2020 | Summary of 2019 Annual Report | 2020-24 |
| 25 | April 30, 2020 | Announcement on the Proposal on the 2019 Profit Distribution Plan | 2020-25 |
| 26 | April 30, 2020 | Notice on Holding 2019 Annual General Meeting | 2020-26 |
| 27 | April 30, 2020 | Notification on Holding the Online Performance Presentation for the 2019 Annual Report | 2020-27 |
| 28 | April 30, 2020 | Body of the Report for the First Quarter of 2020 | 2020-28 |
| 29 | May 8, 2020 | Announcement on the Progress of Repurchase of Company Shares | 2020-29 |
| 30 | May 8, 2020 | Progress Announcement on Share Reduction Plan for Senior Managers of the Company | 2020-30 |
| 31 | May 15, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-31 |
| 32 | May 15, 2020 | Completion Announcement on Share Reduction Plan for Directors and Senior Managers of the Company | 2020-32 |
| 33 | May 16, 2020 | Notice of Pre-disclosure on Expiration of the Shareholding Reduction Plan for Senior Managers of the Company and the Next Shareholding Reduction Plan | 2020-33 |
| 34 | May 22, 2020 | Announcement on Resolutions of 2019 Annual General Meeting of Shareholders | 2020-34 |
| 35 | May 22, 2020 | Announcement on Resolutions of 23rd Meeting of the Fourth Board of Directors | 2020-35 |
| 36 | May 22, 2020 | Announcement on Resolutions of the 19th Meeting of the Fourth Board of Supervisors | 2020-36 |
| 37 | May 22, 2020 | Announcement on the Termination of Repurchase of Company Shares | 2020-37 |
| 38 | May 22, 2020 | Announcement on the Unlock Condition Achievement for the First Release Period Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-38 |
| 39 | May 22, 2020 | Announcement on the Exercise Conditions of the First Exercise Period of the Equities Option Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-39 |
| 40 | May 22, 2020 | Announcement on the Repurchase and Deregistration of Partial Restricted Stock Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-40 |
| 41 | May 22, 2020 | Announcement on the Deregistration of Partial Stock Options Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-41 |
| 42 | May 23, 2020 | Announcement on the Implementation of 2019 Annual Equity Allocation | 2020-42 |
| 43 | May 27, 2020 | Announcement on the Resignation of the Company’s Director | 2020-43 |
| 44 | May 29, 2020 | Announcement on Resolutions of the 24th Meeting of the Fourth Board of Directors | 2020-44 |
| 45 | May 29, 2020 | Announcement on Resolutions of the 20th Meeting of the Fourth Board of Supervisors | 2020-45 |
| 46 | May 29, 2020 | Announcement on the Adjustment of Exercise Price of Stock Options of 2018 Stock Option and Restricted Stock Incentive Plan | 2020-46 |
| 47 | May 29, 2020 | Announcement on the By-election of Dependent Directors of the Fourth Board of Directors | 2020-47 |
| 48 | May 29, 2020 | Notice on Holding 2020 Second Extraordinary General Meeting | 2020-48 |
| 49 | June 4, 2020 | Indicative Announcement on Lifting the Sales Restriction in the First Release Period Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-49 |
| 50 | June 8, 2020 | Indicative Announcement on the Adoption of the Autonomous Exercise Mode in the First Exercising Period of the Stock Option Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-50 |
| 51 | June 16, 2020 | Progress Announcement on Share Reduction Plan for Senior Managers of the Company | 2020-51 |
| 52 | June 16, 2020 | Announcement on the Accomplishment of the Deregistration of Partial Stock Option Firstly Granted by 2018 Stock Option and Restricted Stock Incentive Plan | 2020-52 |
| 53 | June 16, 2020 | Announcement on Resolutions of 2020 Second Extraordinary General Meeting of Shareholders | 2020-53 |
| 54 | June 16, 2020 | Announcement on Capital Decrease | 2020-54 |
| 55 | June 23, 2020 | Announcement on Resolutions of the 25th Meeting of the Fourth Board of Directors | 2020-55 |
| 56 | June 23, 2020 | Announcement on the Election of Vice Chairman of the Fourth Board of Directors | 2020-56 |
| 57 | June 23, 2020 | Announcement on the Appointment of Joint General Manager of the Company | 2020-57 |
XVIII. Major Issues of the Company’s Subsidiaries
√ Applicable □ Inapplicable
1. In February 2020, the Company’s wholly-owned subsidiary, C&S (Yunfu) Paper Co., Ltd. maderapid response to the pneumonia outbreak based on the implementation of local governmentrequirements. It solved the problem of scarce mask production, developed its business of producingand selling surgical masks and has acquired the Emergency Medical Device Production andEmergency Medical Device Record Certificate, possessing the qualifications in the production andsale of surgical masks. Details can be found in the following documents published on February 10,2020 and February 13, 2020 on the designated information disclosure media Securities Times(STCN, www.stcn.com), China Securities News, Securities Daily (www.zqrb.com), ShanghaiSecurities News (www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Announcement onthe Production and Sale of Medical Masks by Wholly-owned Subsidiaries (Announcement No.2020-04) and Announcement on the Acquisition of Emergency Medical Device Production andEmergency Medical Device Record Certificate by Subordinate Subsidiaries (Announcement No.2020-06).
2. The company and its seven subsidiaries have increased business scope of selling daily-use
chemical products and medical devices, and augmented the registered capital and changed the legalrepresentative. Moreover, the Company has completed the industrial and commercial proceduresand obtained new licenses. Details can be found in the following documents published on March 11,2020 and March 31, 2020 on the designated information disclosure media Securities Times (STCN,www.stcn.com), China Securities News, Securities Daily (www.zqrb.com), Shanghai SecuritiesNews (www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Notice on Completion ofIndustrial and Commercial Change Registration of Subordinate Subsidiaries (Announcement No.2020-14) and the Announcement on the Completion of Industrial and Commercial RegistrationAmendment of Company and Partially-owned Subsidiaries (Announcement No. 2020-19) andAnnouncement on the Completion of Industrial and Commercial Registration Amendment ofSubsidiaries (Announcement No. 2020-31).
Section VI Equity Changes and ShareholdersI. Changes in Shares
1. Changes in shares
Unit: Share
| Before this change | Increase and decrease of this change (+, -) | After this change | |||||||
| Number of shares | Percentage | Issuance of additional shares | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | Number of shares | Percentage | |
| I. Share Subject to Restrictions on Sales | 43,764,852 | 3.34% | -6,396,337 | -6,396,337 | 37,368,515 | 2.85% | |||
| 3. Other domestic shareholding | 41,134,807 | 3.14% | -5,718,326 | -5,718,326 | 35,416,481 | 2.70% | |||
| Shares held by domestic individuals | 41,134,807 | 3.14% | -5,718,326 | -5,718,326 | 35,416,481 | 2.70% | |||
| 4. Foreign shareholdings | 2,630,045 | 0.20% | -678,011 | -678,011 | 1,952,034 | 0.15% | |||
| Shares held by overseas individuals | 2,630,045 | 0.20% | -678,011 | -678,011 | 1,952,034 | 0.15% | |||
| II. Shares Not Subject to Restrictions on Sales | 1,265,126,421 | 96.66% | 8,976,055 | 8,976,055 | 1,274,102,476 | 97.15% | |||
| 1. Ordinary domestic shares | 1,265,126,421 | 96.66% | 8,976,055 | 8,976,055 | 1,274,102,476 | 97.15% | |||
| III. Total Number of Shares | 1,308,891,273 | 100.00% | 2,579,718 | 2,579,718 | 1,311,470,991 | 100.00% | |||
Reason of change in shares
√ Applicable □ Inapplicable
On May 21, 2020, after holding the 23rd meeting of the fourth Board of Directors, the Companypassed the Proposal on the Achievement of Exercise Conditions of the First Exercise Period of StockOption for the First Time under the Company's 2018 Stock Option and Restricted Stock IncentivePlan, and the exercise conditions of the first exercise period of the equities options for the first timehave been fulfilled. This time, the independent exercise mode is adopted with the actual exerciseperiod from June 10, 2020 to February 26, 2021. As at June 29, 2020, the options of 2,579,718 shareshave been exercised and 2,579,718 shares have been issued, and the total share capital has increasedfrom 1,308,891,273 to 1,311,470,991.
Approval of share changes
√ Applicable □ Inapplicable
The related matters in the first unlocking period of restricted stocks firstly granted by Stock Optionsand Restricted Stock Incentive Plan in 2018 has been authorized by the first general meeting ofshareholders of the Company in 2019 and approved by the 23rd meeting of the Board of Directors,together with the achievement of exercise conditions in the first exercise period.Transfer of shares
□ Applicable √ Inapplicable
Implementation of share repurchase
√ Applicable □ Inapplicable
Phase II share repurchase planOn April 18, 2019, the 12th meeting of the fourth Board of Directors passed the Proposal on theCompany's Share Repurchase. The Company aims to repurchase part of the Company's shares bycentralized bidding transaction, with a total amount of RMB200 million (inclusive) - RMB400million (inclusive). The buyback price shall not outstrip RMB13.69/share (inclusive). All shares tobe repurchased will be used for employee stock ownership plans.On August 5, 2019, the Company held the 15th meeting of the fourth of Board of Directors andpassed Proposal on Adjustment of the Upper Limit of Share Repurchase Price. In line with thepositive changes in the capital market and the Company's stock price, the Company adjusted theshare repurchase price to ensure company's share repurchase based on the development confidencein the Company's future business and market value. The repurchase price was adjusted from nomore than RMB13.69/share (inclusive) to no more than RMB18.81/share (inclusive).From March 19 to March 20, 2020, the Company conducted share repurchase by centralizedbidding. The number of shares repurchased was 1,895,900 accumulatively, accounting for 0.1448%of the Company's total share capital. The highest transaction amount was RMB15/share, the lowestone was RMB14.34/share, and the total transaction amount was RMB27,680,721.76(with notransaction costs included).On May 21, 2020, after holding the 23rd meeting of the fourth Board of Directors, the Companypassed the Proposal on Termination of Share Repurchase of the Company, and then the Companyterminated the share repurchase plan.Implementation of share repurchase by centralized bidding
□ Applicable √ Inapplicable
The impact of share changes on basic earnings per share and diluted earnings per share, net assetsper share attributable to ordinary shareholders of the Company in last year and the latest period
□ Applicable √ Inapplicable
Other contents considered necessary by the Company or required to be disclosed by the securitiesregulatory authority
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the reporting period | Number of shares released from restricted sales in the current period | Increase of restricted shares in the current period | Number of restricted shares at the end of the period | Reasons for sales restriction | Date of lifting sales restriction |
| Deng Yingzhong | 4,679,558 | 4,679,558 | Lock-in shares of senior management | Long-term | ||
| Deng Guanbiao | 3,718,105 | 3,718,105 | Lock-in shares of senior management | Long-term | ||
| Deng Guanjie | 900,730 | 900,730 | Lock-in shares of senior management | Long-term | ||
| Liu Jinfeng | 1,733,967 | 703,492 | 1,030,475 | Lock-in shares of senior management | Long-term | |
| Zhou Qichao | 663,579 | 165,825 | 497,754 | Lock-in shares of senior management | Long-term | |
| Dong Ye | 134,625 | 71,081 | 45,000 | 108,544 | As for senior management lock-in shares, the increased restricted shares are unlocked restricted stocks due to the proportional locking of senior management. | Long-term |
| Li Youquan | 40,800 | 15,000 | 33,300 | Lock-in shares of senior management | Long-term | |
| Dai Zhenji | 220,045 | 555,011 | 600,000 | 265,034 | As for senior management lock-in shares, the increased restricted shares are unlocked restricted stocks due to the proportional locking of senior management. | Long-term |
| Yue Yong | 9,206,243 | 55,000 | 9,261,243 | As for senior management lock-in shares, the increased restricted shares | Long-term |
| are unlocked restricted stocks due to the proportional locking of senior management. | ||||||
| Equity incentive recipients | 22,467,200 | 5,593,428 | 16,873,772 | In accordance with 2018 Stock Option and Restricted Stock Incentive Plan (Draft), the unlocking conditions of the first release period for some restricted stocks granted for the first time have been fulfilled. The Company will unlock the shares with the number of 5,593,428 shares. | Restricted shares were released as early as June 8, 2020, and the remaining restricted shares will be released according to 2018 Stock Option and Restricted Stock Incentive Plan (Draft). | |
| Total | 43,764,852 | 7,158,837 | 645,000 | 37,368,515 | -- | -- |
II. Details of Securities Issuance and Listing
□ Applicable √ Inapplicable
III. Number of Shareholders and Particulars of Shareholding
Unit: Share
| Total number of ordinary shareholders at the end of the reporting period | 38,258 | Total number of preference shareholders with voting rights restored at the end of the reporting period (if any) (refer to note 8) | 0 | ||||||||
| Ordinary shareholders boasting more than 5% or top ten ordinary shareholders | |||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total number of ordinary shareholders at the end of the reporting period | Changes in shareholding during the reporting period | Number of ordinary shares subject to restrictions on sales | Number of ordinary shares with no restrictions on sales | Pledged or locked-up shares | ||||
| Share status | Number of shares | ||||||||||
| Guangdong Zhongshun Paper Group Co., Ltd. | Domestic non-state-owned legal person | 28.64% | 375,655,958 | 375,655,958 | |||||||
| Chung Shun Co. | Foreign legal person | 20.32% | 266,504,789 | 266,504,789 | |||||||
| Hong Kong | Foreign legal | 7.66% | 100,420,938 | Buy | 100,420,938 | ||||||
| Securities Clearing Co., Ltd. | person | |||||||
| China Merchants Bank Co., Ltd. - Xingquan Heyi Flexible Allocation Graded Hybrid Securities Investment Fund (LOF) | Others | 1.09% | 14,326,980 | New | 14,326,980 | |||
| Yue Yong | Domestic natural person | 0.97% | 12,743,741 | Reduce | 10,031,243 | 2,712,498 | ||
| C&S Paper Co., Ltd.-- Phase II Employee Stock Ownership Plan | Others | 0.89% | 11,709,583 | New | 11,709,583 | |||
| Investec Asset Management Co., Ltd. -- Investec Global Fund Strategy -- China Stock Fund (Exchange) | Foreign legal person | 0.79% | 10,333,380 | New | 10,333,380 | |||
| National Social Security Fund Portfolio 406 | Others | 0.78% | 10,286,511 | New | 10,286,511 | |||
| National Social Security Fund Portfolio 101 | Others | 0.75% | 9,852,669 | New | 9,852,669 | |||
| China Merchants Bank Co., Ltd. -- Xingquan Herun Graded Hybrid Securities Investment | Others | 0.71% | 9,368,027 | New | 9,368,027 |
| Fund | |||||
| Strategic investors or general legal persons becoming top ten ordinary shareholders on account of placement of new shares (if any) (see note 3) | None | ||||
| Whether the above-mentioned shareholders have a related party relationship or are persons acting in concert | 1. Among the top ten shareholders mentioned above, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by Deng Yingzhong, Deng Guanbiao and Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. 2. The Company does not figure out whether there is a related party relationship between other shareholders, and whether there is a person acting in concert as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders' Shareholding of Listed Companies. | ||||
| Holdings of the top ten ordinary shareholders not subject to restrictions on sales | |||||
| Name of shareholder | Number of ordinary shares held that are not subject to restrictions on sales at the end of the reporting period | Type of shares | |||
| Type of shares | Number of shares | ||||
| Guangdong Zhongshun Paper Group Co., Ltd. | 375,655,958 | RMB-denominated ordinary shares | 375,655,958 | ||
| Chung Shun Co. | 266,504,789 | RMB-denominated ordinary shares | 266,504,789 | ||
| Hong Kong Securities Clearing Co., Ltd. | 100,420,938 | RMB-denominated ordinary shares | 100,420,938 | ||
| China Merchants Bank Co., Ltd. - Xingquan Heyi Flexible Allocation Graded Hybrid Securities Investment Fund (LOF) | 14,326,980 | RMB-denominated ordinary shares | 14,326,980 | ||
| C&S Paper Co., Ltd.-- Phase II Employee Stock Ownership Plan | 11,709,583 | RMB-denominated ordinary shares | 11,709,583 | ||
| Investec Asset Management Co., Ltd. -- Investec Global Fund Strategy -- China Stock Fund (Exchange) | 10,333,380 | RMB-denominated ordinary shares | 10,333,380 | ||
| National Social Security Fund Portfolio 406 | 10,286,511 | RMB-denominated ordinary shares | 10,286,511 | ||
| National Social Security Fund Portfolio 101 | 9,852,669 | RMB-denominated ordinary shares | 9,852,669 | ||
| China Merchants Bank Co., Ltd. -- Xingquan Herun Graded Hybrid Securities Investment Fund | 9,368,027 | RMB-denominated ordinary shares | 9,368,027 | ||
| Li Hong | 8,706,669 | RMB-denominated ordinary shares | 8,706,669 | ||
| Whether the top ten shareholders of ordinary shares without restrictions on sale, or the above-mentioned shareholders and the top ten ordinary shareholders have a related party relationship or are persons acting in concert. | 1. Among the top ten shareholders mentioned above, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by Deng Yingzhong, Deng Guanbiao and Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. 2. The Company does not figure out whether there is a related party relationship between other shareholders, and whether there is a person acting in concert as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders' Shareholding of Listed Companies. | ||||
| Description of top ten ordinary shareholders engaging in margin trading | None | ||||
Whether the top ten ordinary shareholders and the top ten shareholders without restrictions on saleconducted the agreed repurchase transaction during the reporting period
□ Yes √ No
The Company's top ten ordinary shareholders and top ten ordinary shareholders without restrictionson sale did not conduct agreed repurchase transactions during the reporting period.IV. The Change in Controlling Shareholder or De Facto ControllerChanges of controlling shareholders during the reporting period
□ Applicable √ Inapplicable
There was no change in the controlling shareholder during the reporting period.Change of actual controlling shareholder during the reporting period
□ Applicable √ Inapplicable
There was no change in actual controlling shareholder during the reporting period.
Section VII Details of Preference Shares
□ Applicable √ Inapplicable
During the reporting period, there was no preference stock.
Section VIII Convertible Corporate Bonds
□ Applicable √ Inapplicable
During the reporting period, there was no convertible bond.
Section IX Profiles of Directors, Supervisors, and Senior ManagementI. Changes in Shareholding of Directors, Supervisors and Senior Managers
√ Applicable □ Inapplicable
| Name | Title | Position status | Number of shares held at the beginning of the reporting period (shares) | Number of shares increased in the current period (shares) | Number of shares decreased in the current period (shares) | Number of shares held at the end of the reporting period (shares) | Number of restricted shares granted at the beginning of the period (shares) | Number of restricted shares granted in the current period (shares) | Number of restricted shares granted at the end of the period (shares) |
| Deng Yingzhong | Chairman of the Board of Directors | Incumbent | 6,239,411 | 6,239,411 | |||||
| Deng Guanbiao | Vice Chairman | Incumbent | 4,957,473 | 4,957,473 | |||||
| Deng Guanbiao | General Manager | Incumbent | |||||||
| Deng Guanjie | Vice Chairman | Incumbent | 1,200,974 | 1,200,974 | |||||
| Liu Jinfeng | Director | Incumbent | 2,813,967 | 703,417 | 2,110,550 | ||||
| Liu Jinfeng | Deputy General Manager | Incumbent | |||||||
| Dai Zhenji | Director | Incumbent | |||||||
| Dai Zhenji | Joint General Manager | Incumbent | 2,220,045 | 550,045 | 1,670,000 | ||||
| Zeng Yi | Director | Incumbent | |||||||
| Huang Hongyan | Independent Director | Incumbent | |||||||
| Ge Guangrui | Independent Director | Incumbent | |||||||
| He Haidi | Independent Director | Incumbent | |||||||
| Chen Haiyuan | Chairman of the Board of Supervisors | Incumbent | |||||||
| Liang Yongliang | Supervisor | Incumbent | |||||||
| Li Youquan | Supervisor | Incumbent | 62,280 | 62,280 | |||||
| Zhou Qichao | Deputy General Manager | Incumbent | 663,672 | 165,000 | 498,672 | ||||
| Zhou Qichao | Board Secretary | Incumbent | |||||||
| Dong Ye | Chief Financial Officer | Incumbent | 284,725 | 71,000 | 213,725 | ||||
| Yue Yong | Deputy | Incumbent | 13,374,991 | 631,250 | 12,743,741 |
| General Manager | |||||||||
| Ye Longfang | Deputy General Manager | Incumbent | |||||||
| Deng Guanjie | Deputy General Manager | Resigned | |||||||
| Zhou Qichao | Director | Resigned | |||||||
| Total | -- | -- | 31,817,538 | 0 | 2,120,712 | 29,696,826 | 0 | 0 | 0 |
II. Changes in Directors, Supervisors and Senior Managers
√ Applicable □ Inapplicable
| Name | Position | Type | Date | Reason |
| Zhou Qichao | Director | Resigned | May 26, 2020 | Voluntarily resign |
| Dai Zhenji | Director | Elected | June 15, 2020 | Elected at a meeting of the Board of Directors |
| Dai Zhenji | Joint General Manager | Appointed | June 22, 2020 | Appointed at a meeting of the Board of Directors |
| Deng Guanjie | Deputy General Manager | Dismissed | June 22, 2020 | Voluntarily resign |
| Deng Guanjie | Vice Chairman | Elected | June 22, 2020 | Elected at a meeting of the Board of Directors |
Section X Corporate Bonds
Whether there are any publicly issued corporate bonds that are listed on the stock exchange and arenot due at the date of issuance of the semi-annual report approval or fail to be redeemed for full facevalue at maturityNo
Section XI Financial ReportI. Audit ReportWhether the semi-annual report has been audited
□ Yes √ No
The semi-annual financial report has not been audited.II. Financial StatementsThe unit of financial statements is: RMB
1. Consolidated balance sheet
Prepared by: C&S Paper Co., Ltd.
June 30, 2020
Unit: RMB
| Item | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 933,473,976.97 | 703,746,624.42 |
| Settlement reserve | ||
| Lending to banks and other financial institutions | ||
| Tradable financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 608,962.30 | 301,904.32 |
| Accounts receivable | 822,077,129.81 | 807,772,897.68 |
| Accounts receivable financing | ||
| Prepayments | 43,008,049.97 | 14,877,757.16 |
| Premium receivable | ||
| Reinsurance payables | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 32,122,559.84 | 8,240,417.99 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets held under resale agreements | ||
| Inventory | 1,178,918,505.39 | 986,405,689.17 |
| Contract assets | ||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 |
| Non-current assets due within one year | ||
| Other current assets | 252,093,066.16 | 165,567,805.78 |
| Total current assets | 3,319,375,310.13 | 2,743,986,156.21 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Credit right investments | ||
| Other credit right investments |
| Long-term receivable | ||
| Long-term equity investment | ||
| Investment in other equity instruments | ||
| Other non-current assets | ||
| Investment property | 35,336,048.69 | 36,039,381.30 |
| Property and equipment | 2,907,864,726.86 | 2,921,392,106.87 |
| Construction work in progress | 22,256,470.46 | 55,734,236.91 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 167,613,708.93 | 168,731,781.83 |
| Development expenses | ||
| Goodwill | 64,654.15 | 64,654.15 |
| Long-term deferred expenses | 16,792,595.91 | 13,686,397.24 |
| Deferred income tax assets | 106,712,993.49 | 80,331,080.17 |
| Other non-current assets | 36,687,133.69 | 6,306,028.96 |
| Total non-current assets | 3,293,328,332.18 | 3,282,285,667.43 |
| Total assets | 6,612,703,642.31 | 6,026,271,823.64 |
| Current liabilities: | ||
| Short-term loans | 161,860,368.50 | 14,721,492.38 |
| Borrowings from PBC | ||
| Placements from banks and other financial institutions | ||
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 204,505,448.05 | 202,653,860.31 |
| Accounts payable | 586,807,107.68 | 578,212,781.22 |
| Payments received in advance | 142,476,562.31 | |
| Contract liabilities | 79,981,886.78 | |
| Proceeds from financial assets sold under repo | ||
| Customer bank deposits and due to banks and other financial institutions | ||
| Funds from securities trading agency | ||
| Funds from securities underwriting agency | ||
| Employee remuneration payable | 92,264,018.86 | 106,413,600.27 |
| Tax and fees payable | 101,707,460.78 | 101,670,618.11 |
| Other payables | 712,822,436.31 | 635,834,511.05 |
| Including: Interests payable | 41,625.00 | 173,259.89 |
| Dividends payable | 1,510,753.80 | 452,536.50 |
| Transaction fee and commission receivable | ||
| Reinsurance payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 32,400,000.00 | |
| Other current liabilities |
| Total current liabilities | 1,939,948,726.96 | 1,814,383,425.65 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term Loans | 22,500,000.00 | |
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term employee remuneration payable | ||
| Provision | ||
| Deferred income | 102,975,006.83 | 82,367,831.33 |
| Deferred income tax liabilities | 37,539,267.58 | 30,016,107.43 |
| Other non-current liabilities | ||
| Total non-current liabilities | 140,514,274.41 | 134,883,938.76 |
| Total liabilities | 2,080,463,001.37 | 1,949,267,364.41 |
| Owner's equity: | ||
| Share capital | 1,310,680,059.00 | 1,308,891,273.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 858,352,488.79 | 760,731,416.57 |
| Less: Treasury shares | 103,719,823.96 | 104,792,649.00 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 53,205,582.86 | 53,205,582.86 |
| General reserves | ||
| Retained earnings | 2,413,722,334.25 | 2,058,968,835.80 |
| Total equity attributable to the owners of the parent company | 4,532,240,640.94 | 4,077,004,459.23 |
| Equities of minority shareholders | ||
| Total owner's equity | 4,532,240,640.94 | 4,077,004,459.23 |
| Total liabilities and owners' equities | 6,612,703,642.31 | 6,026,271,823.64 |
Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge ofaccounting department: Xu Xianjing
2. The parent company's balance sheet
Unit: RMB
| Item | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 186,441,417.73 | 156,202,659.45 |
| Tradable financial assets | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 87,304,544.39 | 127,203,426.87 |
| Accounts receivable |
| financing | ||
| Prepayments | 7,274,161.53 | 2,565,716.66 |
| Other receivables | 42,634,717.52 | 637,511,752.54 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 98,445,575.21 | 84,567,041.98 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 154,346,353.09 | 129,377,576.74 |
| Total current assets | 576,446,769.47 | 1,137,428,174.24 |
| Non-current assets: | ||
| Credit right investments | ||
| Other credit right investments | ||
| Long-term receivable | ||
| Long-term equity investment | 1,918,835,099.92 | 1,231,245,128.96 |
| Investment in other equity instruments | ||
| Other non-current assets | ||
| Investment property | 18,370,935.84 | 18,745,192.09 |
| Property and equipment | 264,916,338.29 | 222,724,273.70 |
| Construction work in progress | 301,278.46 | 35,260,100.44 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 21,861,883.64 | 21,259,498.66 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 43,951,221.49 | 18,366,334.29 |
| Other non-current assets | 5,485,050.50 | 4,521,074.21 |
| Total non-current assets | 2,273,721,808.14 | 1,552,121,602.35 |
| Total assets | 2,850,168,577.61 | 2,689,549,776.59 |
| Current liabilities: | ||
| Short-term loans | ||
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 403,841,455.14 | 325,506,510.90 |
| Payments received in advance | 28,227,454.47 | |
| Contract liabilities | 28,841,094.26 | |
| Employee remuneration payable | 28,873,838.23 | 24,280,403.99 |
| Tax and fees payable | 2,223,293.82 | 3,225,793.88 |
| Other payables | 135,745,112.94 | 167,279,884.09 |
| Including: Interests payable | ||
| Dividends payable | 1,510,753.80 | 452,536.50 |
| Liabilities held for sale | ||
| Non-current liabilities due |
| within one year | ||
| Other current liabilities | ||
| Total current liabilities | 599,524,794.39 | 548,520,047.33 |
| Non-current liabilities: | ||
| Long-term Loans | ||
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term employee remuneration payable | ||
| Provision | ||
| Deferred income | 6,459,142.97 | 7,062,818.69 |
| Deferred income tax liabilities | 6,316,553.92 | 5,575,323.82 |
| Other non-current liabilities | ||
| Total non-current liabilities | 12,775,696.89 | 12,638,142.51 |
| Total liabilities | 612,300,491.28 | 561,158,189.84 |
| Owner's equity: | ||
| Share capital | 1,310,680,059.00 | 1,308,891,273.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 781,290,779.90 | 690,241,724.38 |
| Less: Treasury shares | 103,719,823.96 | 104,792,649.00 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 53,084,248.58 | 53,084,248.58 |
| Retained earnings | 196,532,822.81 | 180,966,989.79 |
| Total owner's equity | 2,237,868,086.33 | 2,128,391,586.75 |
| Total liabilities and owners' equities | 2,850,168,577.61 | 2,689,549,776.59 |
3. Consolidated income statement
Unit: RMB
| Item | First half of 2020 | First half of 2019 |
| I. Total Operating Income | 3,616,201,399.80 | 3,172,389,026.96 |
| Including: Operating income | 3,616,201,399.80 | 3,172,389,026.96 |
| Interest Income | ||
| Gross earned premiums | ||
| Service charge and commission income | ||
| II. Total Operating Cost | 3,081,938,688.14 | 2,839,540,130.78 |
| Including: Operating costs | 1,931,406,918.16 | 2,008,336,231.02 |
| Interest expenses | ||
| Service charge and commission expenses | ||
| Surrender value | ||
| Net compensation expenses | ||
| Net appropriation of insurance reserve | ||
| Policy dividends expenses |
| Reinsurance costs | ||
| Tax and surcharges | 26,920,007.36 | 17,781,889.77 |
| Selling expenses | 848,071,082.60 | 607,769,281.49 |
| Administrative expense | 185,701,854.01 | 126,787,650.22 |
| R&D expenses | 90,860,828.24 | 64,040,654.87 |
| Finance expenses | -1,022,002.23 | 14,824,423.41 |
| Including: Interest fees | 1,140,788.29 | 8,797,536.95 |
| Interest Income | 4,060,998.02 | 1,693,449.28 |
| Plus: Other income | 15,174,645.20 | 4,557,020.41 |
| Return on investment ("-" indicates loss) | 2,287,274.87 | 72,378.41 |
| Including: Return on investment in associates and joint ventures | ||
| Income from the derecognition of financial assets measured at amortized cost | ||
| Exchange gain ("-" indicates loss) | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -1,423,699.75 | 1,029,502.08 |
| Asset impairment losses ("-" indicates loss) | -850,381.40 | -2,522,408.99 |
| Return on disposal of assets ("-" indicates loss) | -896,870.05 | -389,173.07 |
| III. Operating Profit ("-" indicates loss) | 548,553,680.53 | 335,596,215.02 |
| Plus: Non-operating income | 3,169,241.16 | 2,735,749.22 |
| Less: Non-operating expenditure | 13,240,183.16 | 411,368.58 |
| IV. Total Profit ("-" indicates total loss) | 538,482,738.53 | 337,920,595.66 |
| Less: Income tax expense | 85,783,253.92 | 63,045,961.23 |
| V. Net Profit ("-" indicates net loss) | 452,699,484.61 | 274,874,634.43 |
| i. Classified by operation continuity | ||
| 1. Net profit from continued operation ("-" indicates net loss) | 452,699,484.61 | 274,874,634.43 |
| 2. Net profit from discontinued operation ("-" indicates net loss) | ||
| ii. Classified by attribution of ownership | ||
| 1. Net profit attributable to owners of the parent company | 452,699,484.61 | 274,874,634.43 |
| 2. Minority shareholders' profits and losses | ||
| VI. Net Amount of Other Comprehensive Income after Tax | ||
| Total other comprehensive after-tax net income attributable to owners of the parent company | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss | ||
| 1. Other comprehensive income to be |
| transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor's rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| Total other comprehensive after-tax net income attributable to minority shareholders | ||
| VII. Total Comprehensive Income | 452,699,484.61 | 274,874,634.43 |
| Total comprehensive income attributable to owners of the parent company | 452,699,484.61 | 274,874,634.43 |
| Total comprehensive income attributable to minority shareholders | ||
| VIII. Earnings per Share: | ||
| i. Basic earnings per share | 0.3519 | 0.2162 |
| ii. Diluted earnings per share | 0.3462 | 0.2156 |
For business combinations of the current period under common control, the net profit realized bythe combined party before the combination is: RMB0.00, the net profit realized by the combinedparty in last period is: RMB0.00.Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge ofaccounting department: Xu Xianjing
4. Income statement of the parent company
Unit: RMB
| Item | First half of 2020 | First half of 2019 |
| I. Operating Income | 853,891,264.03 | 563,613,980.60 |
| Less: Operating cost | 712,614,977.74 | 468,243,872.96 |
| Tax and surcharges | 2,631,659.04 | 2,164,518.74 |
| Selling expenses | 66,501,515.28 | 55,775,298.51 |
| Administrative expense | 91,173,785.60 | 26,638,400.13 |
| R&D expenses | ||
| Finance expenses | 672,377.63 | -3,248,789.47 |
| Including: Interest fees | 6,705,100.34 | |
| Interest Income | 1,722,164.19 | 11,428,271.08 |
| Plus: Other income | 1,098,835.80 | 484,357.53 |
| Return on investment ("-" indicates loss) | 142,109,515.77 | 72,378.41 |
| Including: Return on investment in associates and joint ventures | ||
| Profits from derecognition of financial assets at amortized cost ("-" indicates loss) | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -1,477,826.65 | -361,332.13 |
| Asset impairment losses ("-" indicates loss) | -235,210.66 | -165,408.68 |
| Return on disposal of assets ("-" indicates loss) | -613,479.84 | -469,019.25 |
| II. Operating Profit ("-" indicates loss) | 121,178,783.16 | 13,601,655.61 |
| Plus: Non-operating income | 367,540.33 | 172,026.18 |
| Less: Non-operating expenditure | 11,762,151.77 | 55,898.92 |
| III. Total Profit ("-" indicates total loss) | 109,784,171.72 | 13,717,782.87 |
| Less: Income tax expense | -3,727,647.46 | 3,388,493.80 |
| IV. Net Profit ("-" indicates net loss) | 113,511,819.18 | 10,329,289.07 |
| i. Net profit from continued operation ("-" indicates net loss) | 113,511,819.18 | 10,329,289.07 |
| ii. Net profit from discontinued operation ("-" indicates net loss) | ||
| V. Net Amount of Other Comprehensive Income after Tax | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss | ||
| 1. Other comprehensive income to be transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor's rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| VI. Total Comprehensive Income | 113,511,819.18 | 10,329,289.07 |
| VII. Earnings per Share: | ||
| i. Basic earnings per share | ||
| ii. Diluted earnings per share |
5. Consolidated statement of cash flows
Unit: RMB
| Item | First half of 2020 | First half of 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 3,613,430,926.28 | 3,347,802,544.33 |
| Net increase in deposits from customers, banks and non-bank financial institutions | ||
| Net increase in due to central banks |
| Net increase in placements from other financial institutions | ||
| Cash received from the premium of direct insurance contracts | ||
| Net cash from reinsurance business | ||
| Net increase in deposits and investment of the insured | ||
| Cash obtained from interest, net fee and commission | ||
| Net increase in placements from banks and other financial institutions | ||
| Net increase in repo service fund | ||
| Net cash from agent securities trading | ||
| Tax rebates | 120,214.00 | 33,279.31 |
| Cash received related to other operating activities | 76,989,647.10 | 40,848,294.35 |
| Sub-total of cash inflow from operating activities | 3,690,540,787.38 | 3,388,684,117.99 |
| Cash paid for goods purchased and services rendered | 2,226,834,895.97 | 1,911,521,962.24 |
| Net loans and advances to customers | ||
| Net increase in deposits with the central bank, banks and non-bank financial institutions | ||
| Cash paid for claims of direct insurance contracts | ||
| Net increase in placements with banks and non-bank financial institutions | ||
| Cash paid for interest, fee and commission | ||
| Cash paid for dividends of the insured | ||
| Cash paid to and on behalf of employees | 340,957,388.41 | 284,005,440.48 |
| Tax payments | 259,738,653.85 | 135,395,919.51 |
| Cash payments related to other operating activities | 358,451,260.82 | 322,775,157.40 |
| Sub-total of cash outflow from operating activities | 3,185,982,199.05 | 2,653,698,479.63 |
| Net cash flows from operating activities | 504,558,588.33 | 734,985,638.36 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 2,287,274.87 | 72,378.41 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 30,060,788.00 | 834,037.30 |
| Net amount of cash received from the disposal of subsidiaries and other operating organizations | ||
| Cash received related to other investing activities | 127,105,000.00 | |
| Sub-total of cash inflow from investing activities | 159,453,062.87 | 906,415.71 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 188,914,982.57 | 358,177,083.79 |
| Cash paid for investments | ||
| Net increase in pledged loans | ||
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing activities | 212,400,000.00 | |
| Sub-total of cash outflow from investing activities | 401,314,982.57 | 358,177,083.79 |
| Net cash flows from investing activities | -241,861,919.70 | -357,270,668.08 |
| III. Cash Flows from Financing Activities: |
| Cash received from capital contribution | 85,194,915.00 | |
| Including: Proceeds received by subsidiaries from minority shareholders' investment | ||
| Cash received from borrowings | 257,722,148.28 | 137,829,746.31 |
| Cash received related to other financing activities | ||
| Sub-total of cash inflow from financing activities | 257,722,148.28 | 223,024,661.31 |
| Cash paid for repayments of borrowings | 164,917,045.18 | 339,611,101.42 |
| Cash payment for interest expenses and distribution of dividends or profits | 98,173,895.03 | 40,789,942.78 |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | ||
| Cash payments related to other financing activities | 40,446,866.90 | 16,307,993.62 |
| Sub-total of cash outflow from financing activities | 303,537,807.11 | 396,709,037.82 |
| Net cash flows from financing activities | -45,815,658.83 | -173,684,376.51 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | 3,555,983.87 | -457,305.00 |
| V. Net Increase in Cash and Cash Equivalents | 220,436,993.67 | 203,573,288.77 |
| Plus: Opening balance of cash and cash equivalents | 675,996,852.97 | 371,129,472.06 |
| VI. Closing Balance of Cash and Cash Equivalents | 896,433,846.64 | 574,702,760.83 |
6. Statement of cash flows of the parent company
Unit: RMB
| Item | First half of 2020 | First half of 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 746,412,698.39 | 468,701,075.17 |
| Tax rebates | 120,214.00 | 20,189.55 |
| Cash received related to other operating activities | 987,204,013.79 | 587,308,960.78 |
| Sub-total of cash inflow from operating activities | 1,733,736,926.18 | 1,056,030,225.50 |
| Cash paid for goods purchased and services rendered | 491,197,761.73 | 221,022,475.25 |
| Cash paid to and on behalf of employees | 66,675,479.70 | 36,380,500.54 |
| Tax payments | 21,863,845.36 | 11,302,940.79 |
| Cash payments related to other operating activities | 428,397,315.97 | 567,775,504.30 |
| Sub-total of cash outflow from operating activities | 1,008,134,402.76 | 836,481,420.88 |
| Net cash flows from operating activities | 725,602,523.42 | 219,548,804.62 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 141,992,629.47 | 72,378.41 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 417,864.00 | |
| Net amount of cash received from the disposal of subsidiaries and other operating organizations |
| Cash received related to other investing activities | 127,105,000.00 | |
| Sub-total of cash inflow from investing activities | 269,097,629.47 | 490,242.41 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 18,608,797.77 | 6,231,934.84 |
| Cash paid for investments | 665,600,000.00 | |
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing activities | 152,400,000.00 | |
| Sub-total of cash outflow from investing activities | 836,608,797.77 | 6,231,934.84 |
| Net cash flows from investing activities | -567,511,168.30 | -5,741,692.43 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | 85,194,915.00 | |
| Cash received from borrowings | ||
| Cash received related to other financing activities | 3,420,478.96 | |
| Sub-total of cash inflow from financing activities | 88,615,393.96 | |
| Cash paid for repayments of borrowings | 197,600,000.00 | |
| Cash payment for interest expenses and distribution of dividends or profits | 96,955,934.28 | 38,405,658.84 |
| Cash payments related to other financing activities | 31,482,661.04 | 460,054.74 |
| Sub-total of cash outflow from financing activities | 128,438,595.32 | 236,465,713.58 |
| Net cash flows from financing activities | -128,438,595.32 | -147,850,319.62 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | 259,845.46 | -1,684.66 |
| V. Net Increase in Cash and Cash Equivalents | 29,912,605.26 | 65,955,107.91 |
| Plus: Opening balance of cash and cash equivalents | 156,151,560.82 | 95,287,969.57 |
| VI. Closing Balance of Cash and Cash Equivalents | 186,064,166.08 | 161,243,077.48 |
7. Consolidated statement of changes in owner's equity
Amount of the current period
Unit: RMB
| Item | First half of 2020 | ||||||||||||||
| Owner's equity attributable to the parent company | Equities of minority shareholders | Total owner's equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business combinations involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 1,788,786.00 | 97,621,072.22 | -1,072,825.04 | 354,753,498.45 | 455,236,181.71 | 455,236,181.71 | |||||||||
| i. Total comprehensive income | 452,699,484.61 | 452,699,484.61 | 452,699,484.61 | ||||||||||||
| ii. Capital contributed or decreased by owner | 1,788,786.00 | 97,621,072.22 | -1,072,825.04 | 100,482,683.26 | 100,482,683.26 | ||||||||||
| 1. Ordinary shares | 2,591,508.00 | 19,622,899.06 | 22,214,407.06 | 22,214,407.06 | |||||||||||
| contributed by owners | |||||||||||||||
| 2. Capital contributed by owners of other equity instruments | |||||||||||||||
| 3. Share based payments recognized as owner's equity | -802,722.00 | 77,998,173.16 | -28,753,546.80 | 105,948,997.96 | 105,948,997.96 | ||||||||||
| 4. Others | 27,680,721.76 | -27,680,721.76 | -27,680,721.76 | ||||||||||||
| iii. Profit distribution | -97,945,986.16 | -97,945,986.16 | -97,945,986.16 | ||||||||||||
| 1. Appropriation of surplus reserves | |||||||||||||||
| 2. Appropriation of general risk reserves | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -97,945,986.16 | -97,945,986.16 | -97,945,986.16 | ||||||||||||
| 4. Others | |||||||||||||||
| iv. Interior balance from owner's equity | |||||||||||||||
| 1. Added capital (or share capital) from capital reserves | |||||||||||||||
| 2. Added capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Compensation of loss with surplus reserves | |||||||||||||||
| 4. Retained |
| earnings of carry-over of changes of the defined benefit plan | |||||||||||||||
| 5. Retained earnings of carry-over of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| vi. Others | |||||||||||||||
| IV. Closing Balance of the Period | 1,310,680,059.00 | 858,352,488.79 | 103,719,823.96 | 53,205,582.86 | 2,413,722,334.25 | 4,532,240,640.94 | 4,532,240,640.94 |
Amount of last period
Unit: RMB
| Item | First half of 2019 | ||||||||||||||
| Owner's equity attributable to the parent company | Equities of minority shareholders | Total owner's equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 1,286,692,741.00 | 609,403,941.54 | 122,916,831.04 | 47,304,683.01 | 1,490,758,189.02 | 3,311,242,723.53 | 3,311,242,723.53 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business combinations involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of the Year | 1,286,692,741.00 | 609,403,941.54 | 122,916,831.04 | 47,304,683.01 | 1,490,758,189.02 | 3,311,242,723.53 | 3,311,242,723.53 | ||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 19,406,832.00 | 123,064,031.93 | 56,859,631.31 | 245,153,530.23 | 330,764,762.85 | 330,764,762.85 | |||||||||
| i. Total comprehensive income | 274,874,634.43 | 274,874,634.43 | 274,874,634.43 | ||||||||||||
| ii. Capital contributed or decreased by owner | 19,406,832.00 | 123,064,031.93 | 56,859,631.31 | 85,611,232.62 | 85,611,232.62 | ||||||||||
| 1. Ordinary shares contributed by owners | 19,675,500.00 | 65,519,415.00 | 85,194,915.00 | ||||||||||||
| 2. Capital contributed by owners of other equity instruments | |||||||||||||||
| 3. Share based payments recognized as owner's equity | -268,668.00 | 57,544,616.93 | -28,335,283.69 | 85,611,232.62 | 85,611,232.62 | ||||||||||
| 4. Others | |||||||||||||||
| iii. Profit distribution | -29,721,104.20 | -29,721,104.20 | -29,721,104.20 | ||||||||||||
| 1. Appropriation of surplus reserves | |||||||||||||||
| 2. Appropriation |
| of general risk reserves | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -29,721,104.20 | -29,721,104.20 | -29,721,104.20 | ||||||||||||
| 4. Others | |||||||||||||||
| iv. Interior balance from owner's equity | |||||||||||||||
| 1. Added capital (or share capital) from capital reserves | |||||||||||||||
| 2. Added capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Compensation of loss with surplus reserves | |||||||||||||||
| 4. Retained earnings of carry-over of changes of the defined benefit plan | |||||||||||||||
| 5. Retained earnings of carry-over of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| vi. Others |
| IV. Closing Balance of the Period | 1,306,099,573.00 | 732,467,973.47 | 179,776,462.35 | 47,304,683.01 | 1,735,911,719.25 | 3,642,007,486.38 | 3,642,007,486.38 |
8. Statement of changes in owner's equity of the parent company
Amount of the current period
Unit: RMB
| Item | First half of 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner's equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 1,788,786.00 | 91,049,055.52 | -1,072,825.04 | 15,565,833.02 | 109,476,499.58 | |||||||
| i. Total comprehensive income | 113,511,819.18 | 113,511,819.18 | ||||||||||
| ii. Capital contributed or decreased by owner | 1,788,786.00 | 91,049,055.52 | -1,072,825.04 | 93,910,666.56 | ||||||||
| 1. Ordinary shares contributed by | 2,591,508.00 | 19,622,899.06 | 22,214,407.06 | |||||||||
| owners | ||||||||||||
| 2. Capital contributed by owners of other equity instruments | ||||||||||||
| 3. Share based payments recognized as owner's equity | -802,722.00 | 71,426,156.46 | -28,753,546.80 | 99,376,981.26 | ||||||||
| 4. Others | 27,680,721.76 | -27,680,721.76 | ||||||||||
| iii. Profit distribution | -97,945,986.16 | -97,945,986.16 | ||||||||||
| 1. Appropriation of surplus reserves | ||||||||||||
| 2. Distribution to owners (or shareholders) | -97,945,986.16 | -97,945,986.16 | ||||||||||
| 3. Others | ||||||||||||
| iv. Interior balance from owner's equity | ||||||||||||
| 1. Added capital (or share capital) from capital reserves | ||||||||||||
| 2. Added capital (or share capital) from surplus reserves | ||||||||||||
| 3. Compensation of loss with surplus reserves | ||||||||||||
| 4. Retained earnings of carry-over of changes of the defined benefit plan | ||||||||||||
| 5. Retained earnings of |
| carry-over of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1. Appropriation for the period | ||||||||||||
| 2. Use for the period | ||||||||||||
| vi. Others | ||||||||||||
| IV. Closing Balance of the Period | 1,310,680,059.00 | 781,290,779.90 | 103,719,823.96 | 53,084,248.58 | 196,532,822.81 | 2,237,868,086.33 |
Amount of last period
Unit: RMB
| Item | First half of 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner's equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,286,692,741.00 | 545,219,407.25 | 122,916,831.04 | 47,183,348.73 | 157,579,995.32 | 1,913,758,661.26 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,286,692,741.00 | 545,219,407.25 | 122,916,831.04 | 47,183,348.73 | 157,579,995.32 | 1,913,758,661.26 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 19,406,832.00 | 100,192,495.54 | 56,859,631.31 | -19,391,815.13 | 43,347,881.10 | |||||||
| i. Total comprehensive income | 10,329,289.07 | 10,329,289.07 | ||||||||||
| ii. Capital contributed or decreased by owner | 19,406,832.00 | 100,192,495.54 | 56,859,631.31 | 62,739,696.23 | ||||||||
| 1. Ordinary shares | 19,675,500.00 | 65,519,415.00 | 85,194,915.00 | |||||||||
| contributed by owners | ||||||||||||
| 2. Capital contributed by owners of other equity instruments | ||||||||||||
| 3. Share based payments recognized as owner's equity | -268,668.00 | 34,673,080.54 | -28,335,283.69 | 62,739,696.23 | ||||||||
| 4. Others | ||||||||||||
| iii. Profit distribution | -29,721,104.20 | -29,721,104.20 | ||||||||||
| 1. Appropriation of surplus reserves | ||||||||||||
| 2. Distribution to owners (or shareholders) | -29,721,104.20 | -29,721,104.20 | ||||||||||
| 3. Others | ||||||||||||
| iv. Interior balance from owner's equity | ||||||||||||
| 1. Added capital (or share capital) from capital reserves | ||||||||||||
| 2. Added capital (or share capital) from surplus reserves | ||||||||||||
| 3. Compensation of loss with surplus reserves | ||||||||||||
| 4. Retained earnings of carry-over of changes of the defined benefit plan | ||||||||||||
| 5. Retained earnings of carry-over of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1. Appropriation for the period | ||||||||||||
| 2. Use for the period | ||||||||||||
| vi. Others | ||||||||||||
| IV. Closing Balance of the Period | 1,306,099,573.00 | 645,411,902.79 | 179,776,462.35 | 47,183,348.73 | 138,188,180.19 | 1,957,106,542.36 |
III. Basic Information of the Company
1. Development history of the company
C&S Paper Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited companyrestructured from Zhongshan Zhongshun Paper Manufacturing Co., Ltd., with all shareholders ofthe original company as its initiators. The Company has obtained a business license of enterpriselegal person with the registration number as 442000400013713 issued by Guangdong ProvinceAdministration for Industry and Commerce on December 31, 2008.In November 2010, approved by the Notice on the Approval of the Initial Public Offering of Shares ofC&S Paper Co., Ltd. issued by China Securities Regulatory Commission pursuant to DocumentZH.J.X.K. [2010] No. 1539, the Company issued 40,000,000 RMB-denominated ordinary shares (Ashares) to the public, each having a par value of RMB1. The share capital after the public offering wasRMB160,000,000.00.On May 22, 2012, the Company held the 2011 Annual General Meeting of Shareholders andapproved the Proposal on the 2011 Profit Distribution Plan, applying for an increase of registeredcapital by RMB48,000,000.00. With the base number of 160,000,000.00 total shares as at the end of2011, the Company planned to convert capital reserve into new shares on the basis of three shares forevery ten existing shares. The registered capital after the change was RMB208,000,000.00.On June 3, 2013, the Company held the 2012 Annual General Meeting of Shareholders and approvedthe Proposal on the 2012 Profit Distribution Plan, applying for an increase of registered capital byRMB104,000,000.00. With the base number of 208,000,000.00 total shares as at the end of 2012, theCompany planned to convert capital reserve into new shares on the basis of three shares for every tenexisting shares. The registered capital after the change was RMB312,000,000.00.On May 8, 2014, the Company held the 2013 Annual General Meeting of Shareholders and approvedthe Proposal on the 2013 Profit Distribution Plan, applying for an increase of registered capital byRMB93,600,000.00. With the base number of 312,000,000.00 total shares as at the end of 2013, theCompany planned to convert capital reserve into new shares on the basis of three shares for every tenexisting shares. The registered capital after the change was RMB405,600,000.00.On May 8, 2015, the Company held the 2014 Annual General Meeting of Shareholders and approvedthe Proposal on the 2014 Profit Distribution Plan, applying for an increase of registered capital byRMB81,120,000.00. With the base number of 405,600,000.00 total shares as at the end of 2014, theCompany planned to convert capital reserve into new shares on the basis of two shares for every tenexisting shares. The registered capital after the change was RMB486,720,000.00.Pursuant to the resolutions of the seventh meeting of the third Board of Directors, the ninth meetingof the third Board of Directors, the third extraordinary general meeting of 2015 and the tenthmeeting of the third Board of Directors, the Company planned to grant 17,133,000.00 restrictedRMB-denominated ordinary shares (A shares) to 242 incentive recipients including Liu Jinfengthrough private placement, with a par value of RMB1 per share and a grant price of RMB4.25 pershare. 16,957,000.00 restricted RMB-denominated ordinary shares (A shares) were granted to atotal of 199 incentive recipients with 43 employees withdrawing from the plan. The registeredcapital after the change was RMB503,677,000.00.Pursuant to the resolutions of the third extraordinary general meeting of 2015, the 11th meeting ofthe third Board of Directors and the ninth meeting of the third Board of Supervisors, the Companyplanned to grant 1,867,000.00 restricted RMB-denominated ordinary shares (A shares) to 68incentive recipients including Duan Xianglei through private placement, with a par value of RMB1per share and a grant price of RMB4.80 per share. 1,847,000.00 restricted RMB-denominated
ordinary shares (A shares) were granted to a total of 54 incentive recipients with 14 employeeswithdrawing from the plan. The registered capital after the change was RMB505,524,000.00.On October 24, 2016, at the 15th meeting of the third Board of Directors, Proposal on the Repurchaseand Deregistration of Partial Restricted Stock under the Company's Restricted Stock Incentive Planand Proposal on Changing the Registered Capital and Amending the Articles of Association of theCompany were reviewed and approved. Pursuant to the resolution of the meeting of the Board ofDirectors, the Company applied for the repurchase and deregistration of 266,000.00 restricted stocks.Among them, the repurchase price of restricted stocks granted in the first grant was RMB4.25 pershare, the repurchase price of reserved restricted stocks was RMB4.80 per share, and the registeredcapital after the change was RMB505,258,000.00.On May 10, 2017, the Company held the 2016 Annual General Meeting of Shareholders andapproved the Proposal on the 2016 Profit Distribution Plan, applying for an increase of registeredcapital by RMB252,629,000.00. With the base number of 505,258,000.00 total shares as at the end of2016, the Company planned to convert capital reserve into new shares on the basis of five shares forevery ten existing shares. The registered capital after the change was RMB757,887,000.00.Pursuant to the resolutions of the 22nd and 24th meeting of the third Board of Directors in 2017, aspart of the incentive recipients were disqualified to hold incentive stocks after leaving the Companyor failing the appraisal, the Company planned to repurchase and deregister the restrictive stocks of35 incentive recipients. Among them, 25 incentive recipients were granted in the first period with382,462.50 restrictive stocks and ten incentive recipients were granted with 39,997.50 reservedrestrictive stocks. A total of 422,460.00 shares were repurchased and deregistered. The registeredcapital after the reduction was RMB757,464,540.00.On May 8, 2018, the Company held the 2017 Annual General Meeting of Shareholders and approvedthe Proposal on the 2017 Profit Distribution Plan, applying for an increase of registered capital byRMB530,225,178.00. With the base number of 757,464,540.00 total shares, the Company planned toconvert capital reserve into new shares on the basis of seven shares for every ten existing shares. Theregistered capital after the change was RMB1,287,689,718.00.Pursuant to the resolution of the fifth meeting of the fourth Board of Directors in 2018, as part ofthe incentive recipients were disqualified to hold incentive stocks after leaving the Company orfailing the appraisal at the second release period of the Restricted Stock Incentive Plan, theCompany planned to repurchase and deregister the restrictive stocks of 46 incentive recipients.Among them, 985,426.00 restrictive stocks were granted to 38 incentive recipients in the first grantand 11,551.00 reserved restrictive stocks were granted to eight incentive recipients. A total of996,977.00 shares were repurchased and deregistered. The registered capital after the reduction wasRMB1,286,692,741.00.Pursuant to the resolutions of the ninth meeting of the fourth Board of Directors and the firstextraordinary general meeting in 2019, the Company planned to grant 21,717,500.00 restrictedRMB-denominated ordinary shares (A shares) to 671 incentive recipients including Dong Yethrough private placement, with a par value of RMB1 per share. 19,675,500.00 restrictedRMB-denominated ordinary shares (A shares) were granted to a total of 569 incentive recipients atthe price of RMB4.33, with 102 employees withdrawing from the plan. The registered capital afterthe change was RMB1,306,368,241.00.Pursuant to the resolutions of the 12th and 13th meeting of the fourth Board of Directors, as part ofthe incentive recipients were disqualified to hold incentive stocks after leaving the Company orfailing the appraisal, the Company planned to repurchase and deregister the restrictive stocks of 32incentive recipients. Among them, 211,803.00 restrictive stocks were granted to 22 incentive
recipients in the first grant and 56,865.00 reserved restrictive stocks were granted to ten incentiverecipients. A total of 268,668.00 shares were repurchased and deregistered.Pursuant to the Proposal on Granting Reserved Stock Options and Restricted Stocks to IncentiveRecipients reviewed and approved at the 16th meeting of the fourth Board of Directors in 2019, theCompany planned to grant 64 incentive recipients with 3,500,000.00 restrictive stocks with a grantprice of RMB7.02 per share. The incentive plan actually granted 46 incentive recipients with2,791,700.00 restricted ordinary shares due to the exiting of 18 incentive recipients. The registeredcapital after the grant was RMB1,308,891,273.00.As at December 31, 2019, the Company has had a registered capital of RMB1,308,891,273.00 and ashare capital of RMB1,308,891,273.00.At the 23rd meeting of the fourth Board of Directors and the 19th meeting of the fourth Board ofSupervisors, Proposal on the Achievement of Exercise Conditions of the First Exercise Period ofStock Option for the First Time under the Company's 2018 Stock Option and Restricted StockIncentive Plan was reviewed and approved. In conformity with 2018 Stock Option and RestrictedStock Incentive Plan (Draft), the Board of Directors considered that the first exercise periodexercise conditions of the stock option granted for the first time had been fulfilled. The number ofincentive recipients in conformity with the exercise conditions reached 2,522 and the number ofstock options that have met exercise conditions was 3,431,505.00, with an exercise price ofRMB8.572 per share. During the reporting period, there were 2,591,508.00 stock options exercised,with the registered capital increased by RMB2,591,508.00.The Company held the 23rd meeting of the fourth Board of Directors, approved the Proposal on theRepurchase and Deregistration of Partial Restricted Stock for the First Time under the Company's2018 Stock Option and Restricted Stock Incentive Plan. Besides, the Company convened the secondextraordinary general meeting of Shareholders in 2020, approved the Proposal on Reducing theCompany's Registered Capital and Revising the Articles of Association. When the Phase I ofrestricted stock granted for the first time under the Company's 2018 Stock Option and RestrictedStock Incentive Plan was unlocked, 241 incentive recipients lost incentive qualification due to theirdismission before unlocking, unqualified personal assessment, and failure to get the full markthough qualified in the personal assessment, and they agreed to repurchase and write off a total of802,722.00 granted but not unlocked restricted stocks. In June 2020, the payment for therepurchased and deregistered shares were made to the associated personnel. The follow-upprocedures of repurchase and deregistration as well as the industrial and commercial registration ofchanges are being processed.
2. The registered address, form of organization, and headquarters of the CompanyForm of organization: Company limited by sharesRegistered address: Shenglong Village, Tanbei, Dongsheng Town, ZhongshanAddress of the headquarters the Company: 136 Caihong Avenue, West District, Zhongshan
3. Nature, scope, and main business activities the Company
C&S Paper Co., Ltd. and all its subsidiaries (hereafter generally referred to as the Company) are inthe household paper industry. The Company mainly engages in the R&D, production, processing,and sales (including online sales): High-end household paper series products, tissue boxes,sanitation supplies, cosmetics, non-woven products, daily necessities (limited to plastic products fordaily use, metalware for daily use, rubber products for daily use, and ceramics for daily use), andchemicals for daily use (excluding hazardous chemicals), Class I medical devices. Pulp import and
export (excluding state trading commodities; products in the quota system or requiring a license areapplied for in line with relevant national regulations). Operations and production of Class II and IIImedical devices (involving the production of medical devices and cosmetics) (Business activitiesabove are not restricted by the Special Administrative Measures for the Access of ForeignInvestment) (Business activities subject to approval in accordance with laws shall not be carried outuntil approval from competent authorities has been obtained.) )Since March 2020, the Company expanded its business realm to include medical device-relatedbusinesses.
4. De facto controller of the Company
The corporate actual controllers of the Company are Deng Yingzhong, Deng Guanbiao, and DengGuanjie (Deng Yingzhong is the other two’s father).
5. The issuer and the date of the approval of the financial statementsThe financial statements were approved by the Board of Directors of the Company on August 6,2020.
6. The scope of the consolidation of financial statements
As at June 30, 2020, there were 18 subsidiaries the Company that were included in theconsolidation. For details, please refer to “Note IX Equities in Other Entities”.IV. Preparation Basis for Financial Statements
1. Basis of preparation
The recognition and measurement were made by the Company on a going concern basis andaccording to the Accounting Standards for Business Enterprises - Basic Standards, and the specificaccounting standards based on actual transactions and events, and the financial statements areprepared on such basis.The recognition and measurement were made by the Company on a going concern basis andaccording to the Accounting Standards for Business Enterprises - Basic Standards promulgated bythe Ministry of Finance (No.33 Document, No.76 Revision), and the 42 accounting standards,guidelines for the application of the accounting standards for business enterprises, interpretation tothe accounting standards for business enterprises and other relevant regulations that are successivelypromulgated on or after February 15, 2006 (hereinafter collectively referred to as "AccountingStandards for Business Enterprises") and rules set out in No. 15 Preparation and Reporting Rules ofInformation Disclosure of Public Offering Companies - General Rules for Financial Statements(2014 Revision) issued by China Securities Regulatory Commission based on actual transactionsand events, and the financial statements are prepared on such basis.In accordance with the relevant rules of Accounting Standards for Business Enterprises, thefinancial accounting of the Company is based on accrual basis. Apart from some financial tools, theaccounting measurement of the financial statements is based on accounting costs. Provisions forimpairment of asset is set aside if it is recognized.
2. Going concern
The Company shall be a going concern for at least 12 months following the end of the reportingperiod. There are no major events that will affect the Company’s operational ability, therefore theassumption on which the financial statements are based is reasonable.
V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates:
C&S Paper Co., Ltd. and all its subsidiaries have set out several specific accounting policies andaccounting estimates for transactions and events, such as the recognition of incomes, in accordancewith the Accounting Standards for Business Enterprises and their own operational characteristics.Please refer to “Note V Descriptions for All.”
1. Statement of compliance with the accounting standards for business enterprisesThe financial statements of the Company conform to the requirements set out for the AccountingStandards for Business Enterprises. The statements truthfully and completely reflect the financialstatus, operating results, cash flow, and other relevant information of the Company. In addition, thefinancial statements of the Company are also in accordance with disclosure requirements forfinancial statements and notes in No. 15 Preparation and Reporting Rules of InformationDisclosure of Public Offering Companies - General Rules for Financial Statements of the ChinaSecurities Regulatory Commission (2014 Revision) in all major aspects.
2. Accounting period
The accounting year of the Company is from January 1 to December 31 according to the solarcalendar.
3. Operating cycle
The operating cycle of the Company normally refers to the periods during which the Companypurchases assets for processing and then gets cash or cash equivalents from the processed items.Normally, the operating cycle of a company is shorter than a year. The Company sets 12 months asa full operating cycle and uses the 12-month period as a standard for the liquidity of assets andliabilities.
4. Standard currency for accounting
RMB is the main currency in Chinese mainland, where C&S Paper Co., Ltd. and its subsidiaries arelocated. Therefore, the standard currency for accounting for C&S Paper Co., Ltd. and itssubsidiaries is RMB. The currency for accounting used in the Company’s financial statements isRMB.
5. The accounting processing measures of business combinations involving enterprises undercommon control and business combinations involving enterprises not under common controlBusiness combinations refer to the combination of two or more independent enterprises to form areporting entity of transactions and events. Business combination can be classified as businesscombinations involving enterprises under common control and business combinations involvingenterprises not under common control.
(1) Business combinations involving enterprises under common controlBusiness combinations under common control means enterprises involving business combinationare under ultimate rather than temporary control by one party or the same multi-parties before andafter combination. For business combinations under common control, those who obtain control ofenterprises involving business combination on combination date are the combining party whileenterprises involving business combination are the combined party. Combination date is the datethat the combining party actually obtains control of the combined party.Assets and liabilities that the acquirer gets from the acquiree are calculated and measured at the
book values of the date of combination. If there were differences between the book values of the netassets and the book values of the combined consideration (or the face values of the issued shares)the acquirer receives, the differences will be used to adjust capital reserves (share premium). Wherecapital reserves (share premium) are insufficient to offset, retained earnings shall be adjusted.All direct expenses related to the business combinations paid by the acquirer shall be included incurrent profits and losses upon occurrence.
(2) Business combinations not under common control
Business combinations not under common control means enterprises involving businesscombination are not under ultimate control by one party or the same multi-parties before and aftercombination. For business combinations not under common control, those who obtain control ofenterprises involving business combination on the acquisition date are the acquirer while otherenterprises involving business combination are the acquiree. Acquisition date is the date that theacquirer actually obtains control of the acquiree.For business combinations not under common control, the costs of combinations include the assetsthe acquirer pays, liabilities the acquirer bears, and the fair value of the equity securities issued onthe date of combinations for the acquisition of control over the acquiree. The costs of auditing, legalservices, evaluation consulting, and other management fees incurred for business combinationsshall be included in current profits and losses. The transaction costs of the equity securities and debtsecurities issued by the acquirer shall be included in the initially confirmed amounts of equitysecurities and debt securities. The contingent consideration involved shall be included in the costsof business combinations. If, within 12 months after the acquisition, there is new or further evidencefor conditions that have already been existed on the acquisition and the contingent considerationshall be re-adjusted, the combination goodwill shall also be adjusted accordingly. The acquirer’scosts of business combinations and its identifiable net assets obtained from business combinationsshall be assessed at the fair values of the acquisition date. If the costs of business combinations werehigher than the identifiable net assets of the acquiree on the date of the purchase, the gap betweenthem shall be confirmed as goodwill. If the costs of business combinations were lower than the fairvalues of the identifiable net assets of the acquiree on the date of the purchase, the identifiableassets of the acquiree, contingent liabilities of the fair values, and costs of business combinationsshall all be reviewed. After review, if the costs of business combinations were still lower than thefair values of the identifiable net assets of the acquiree, the gap between them shall be included incurrent profits and losses.If the deductible temporary differences the acquirer gets from the acquiree were not eligible to beconfirmed as deferred tax asset, they shall be confirmed providing that within 12 months of theacquisition, there would be new or further evidence for the conditions that have already beenexisted on the acquisition date that the economic profits the deductible temporary differences wouldbring the acquiree could be achieved. At the same time, the goodwill shall be reduced. Where thegoodwill is insufficient to be deducted, the gap between them as be include in current profits andlosses. Apart from the aforementioned situations, all deductible temporary differences confirmed tobe relevant to business combinations shall be included in current profits and losses.For business combinations not under common control that are achieved through multiple steps,whether they can be regarded as package deals shall be in accordance with Document Notice No.5of the Interpretation of Accounting Standards for Business Enterprises of the Ministry of Finance(C.K. [2012] No.19), and the standards of “package deals” set out in Article 51 of the DocumentAccounting Standard for Business Enterprises – Consolidation of Financial Statements No.33(please refer to Note V, 6 "Methods for preparation of consolidated financial statements" (2)). Incase of "package deals", accounting processing shall be done by referring to the descriptions in
previous paragraphs of this section and 22 "Long-term equity investments" in Note V herein; if not"package deals", accounting processing shall be done by distinguishing individual financialstatements from consolidated financial statements:
In individual financial statements, the initial investment costs shall be the sum of the book value ofthe equity investment of the acquiree held before the acquisition date and the new investment costson the acquisition date; if other comprehensive income is involved in the equities of the acquireebefore the acquisition date, accounting processing shall be done for the comprehensive incomerelated to this investment by adopting the same basis for directly disposing of relevant assets orliabilities of the acquiree during the disposal of this investment (that is, except for the correspondingshares of the changes caused by re-measurement of the net liabilities or net assets of the definedbenefit plan by the acquiree, which are accounted by the equity method, others shall be transferredto the return on investment of the current period).In consolidated financial statements, the equities of the acquiree held before the acquisition dateshall be re-measured at the fair value of the equities on the acquisition date, and the differencebetween the fair value and the book value shall be recognized as the return on investment of thecurrent period; if other comprehensive income is involved in the equities of the acquiree before theacquisition date, accounting processing shall be done for the comprehensive income related to thisinvestment by adopting the same basis for directly disposing of relevant assets or liabilities of theacquiree (that is, except for the corresponding shares of the changes caused by re-measurement ofthe net liabilities or net assets of the defined benefit plan by the acquiree, which are accounted bythe equity method, others shall be transferred to the return on investment of the current period).
6. Methods for preparation of consolidated financial statements
(1) Principles of determining the scope of consolidated financial statementsThe scope of consolidation of consolidated financial statements shall be subject to the basis ofcontrol. Control refers to the power the investor owns against the investee, which allows theinvestor to enjoy the variable return by attending relevant activities held by the investee, and to becapable of using such power to affect the amount of return. The scope of consolidation is theCompany and all of its subsidiaries. Subsidiaries refer to entities controlled by the Company.The Company shall reassess whether it controls an investee if facts and circumstances indicate thatthere are changes to the relevant elements of control as defined above.
(2) Methods for preparation of consolidated financial statements
The Company shall include the subsidiaries in the scope of consolidation from the date it acquiresthe de facto control over the net assets and the decision-making of production and operations ofsuch subsidiaries; accordingly, the Company shall terminate including them in the scope ofconsolidation from the date it loses the de facto control. In terms of subsidiaries disposed of, theoperating results and cash flows before the disposal date have been included in the consolidatedincome statements and the consolidated cash flow statements appropriately; as for subsidiariesdisposed of in current period, the opening balance in the consolidated balance sheet shall not beadjusted. Regarding subsidiaries added, which are incorporated by combining enterprises notcontrolled by the same de facto controller, the operating results and cash flows after the acquisitiondate have been included in the consolidated income statements and the consolidated cash flowstatements appropriately, and the opening and comparative balance in the consolidated balancesheet shall not be adjusted. In case of subsidiaries added, which are incorporated by combiningenterprises controlled by the same de facto controller, among which the Company absorbs thecombined party, the operating results and cash flows of the combined party from the beginning ofthe period of combination to the combination date have been included in the consolidated income
statements and the consolidated cash flow statements appropriately, and the comparative balance inthe consolidated balance sheet shall be adjusted simultaneously.In case of inconsistencies in the accounting policies or periods between subsidiaries and theCompany during preparation of consolidated financial statements, financial statements ofsubsidiaries shall be adjusted according to the accounting policies and periods adopted by theCompany when necessary. For subsidiaries acquired by combining enterprises not controlled by thesame de facto controller, their financial statements shall be adjusted based on the fair value of theidentifiable net assets on the acquisition date.All major business transaction balance, transactions, and unrealized profit of the Company shall beoffset during preparation of consolidated financial statements.Shareholders' equities of subsidiaries and the part of the net profit and loss of the current period notattributable to the Company shall be presented separately under the shareholders' equities and thenet profit in the consolidated financial statements as equities of minority shareholders and minorityshareholders' profits and losses. Shares of equities of minority shareholders in the net profit and lossof the current period of subsidiaries shall be presented under the "minority shareholders' profits andlosses" in the consolidated income statement. If the loss of a subsidiary which is shared by itsminority shareholders exceeds the minority shareholders' share in the opening balance of thesubsidiary, the minority interest shall be reduced.If the parent company loses control of a subsidiary due to partial disposal of equity investment orother reasons, it shall re-measure the remaining equity at fair value on the date of loss of control.The sum of consideration obtained from equity disposal and fair value of the remaining equity,minus the difference between the parent company's share of the subsidiary's net assets that iscontinuously calculated from the acquisition date, shall be recognized as investment income for thereporting period when the loss of control takes place. Accounting processing shall be done for theother comprehensive income related to this investment in the subsidiary's equities by adopting thesame basis for directly disposing of relevant assets or liabilities of the acquiree during the loss ofcontrol (that is, except for the changes caused by re-measurement of the net liabilities or net assetsof the defined benefit plan by the previous subsidiary, others shall be transferred to the return oninvestment of the current period). After that, subsequent measurement shall be done for theremaining equity of this part as per relevant provisions in the Accounting Standards for EnterprisesNo. 2 - Long-term Equity Investment or the Accounting Standards for Business Enterprises No. 22 -Recognition and Measurement of Financial Instruments. See "Note V, 22" or "Note V, 10" fordetails.If the Company disposes of investments in a subsidiary's equities by steps via transactions until itloses control, it shall check whether these transactions from disposal of the investments in thesubsidiary's equities to the loss of control are package deals. If the terms, conditions, and economiceffects of transactions on disposing of equity investment in the subsidiary conform to one or moreof the following circumstances, that means multiple transactions should be treated as package dealsin accounting processing: 1) Those transactions are reached at the same time or after taking intoconsideration the influence of each other; 2) those transactions together produce a completecommercial outcome; 3) the occurrence of one transaction depends on the occurrence of at least oneother transaction; 4) one transaction alone does not seem to be economical, but all thosetransactions are economical when are considered as a whole. In terms of transactions that are notpackage deals, accounting processing shall be done for each transaction following the principlesapplicable to the "partial disposal of long-term equity investment in a subsidiary without loss ofcontrol" or the "loss of control over a subsidiary due to partial disposal of equity investment orother reasons" (see the previous paragraph for details). If those transactions are package deals, each
transaction shall be treated as a transaction that results in loss of control of the subsidiary inaccounting processing. However, the difference between each disposal price before loss of controland the parent company's share of the subsidiary's net assets corresponding to the disposalinvestment shall be recognized as other comprehensive income in the consolidated financialstatements and, after loss of control, transferred to the profit and loss of the current reporting period.
7. Classification of joint operation arrangements and accounting processing methods for jointoperations
8. Criteria for recognition of cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits that can be used for payment at any time,and short-term (due within three months from the acquisition date) investment with high liquidityheld which is easy converted cash in a known amount with small risk of value changes.
9. Translation of transactions and financial statements denominated in foreign currencies
(1) Methods for translation of transactions denominated in foreign currenciesAt the initial recognition of foreign currency transactions of the Company, foreign currency will betranslated into the amount of standard currency for accounting at the spot exchange rate or itsapproximate exchange rate on the transaction date. However, the business of exchange of foreigncurrencies or transactions related to the exchange of foreign currencies, foreign currency will betranslated into the amount of standard currency for accounting at the exchange rate actuallyadopted.
(2) Methods for translation of monetary and non-monetary items in foreign currenciesOn the balance sheet date, the foreign currency monetary items are translated at the spot exchangerate on that date. Exchange difference resulting from the difference between the spot exchange rateon the balance sheet date and that at the initial recognition or on the previous balance sheet dateshall be recognized as the profit and loss of the current period.Non-monetary items that are measured at historical cost in foreign currencies shall still be convertedat the spot exchange rate on the transaction date with the amount of standard currency foraccounting unchanged. Non-monetary items that are measured at fair value in foreign currencies aretranslated using the foreign exchange rates at the date the fair value is recognized. The differencebetween the amount of standard currency for accounting after translation and the original amount ofthe standard currency for accounting shall be treated as a change in fair value (including the changein the exchange rate) and recognized as the profit and loss of the current period or othercomprehensive income.
(3) Methods for translation of foreign-currency financial statements
Foreign-currency financial statements of overseas operations shall be translated into RMB financialstatements by the following methods: The assets and liabilities in the balance sheet shall beconverted at the spot exchange rate on the balance sheet date; except "undistributed profits", all theother owner's equity items are converted at the spot exchange rate at the time of occurrence. Incomeand expense items in the income statement shall be translated using the foreign exchange ratesruling at the dates of the transactions. Difference resulting from translation of foreign-currencyfinancial statements by the following methods shall be recognized as other comprehensive income.Translation of comparative financial statements shall be subject to the above provisions.
10. Financial instruments
When the Company becomes a party to a financial instrument contract, its financial instrument is
confirmed to be either financial assets or financial liabilities.
(1) Classification, recognition, and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flowcharacteristics of financial assets, the Company classified financial assets into the followingcategories: financial assets measured at the amortized cost, financial assets measured at fair valuethrough other comprehensive income and financial assets measured at fair value through profit andloss of the current period.Financial assets are measured at fair value upon initial recognition. For financial assets measured atfair value through profit and loss of the current period, transaction costs are directly included inprofit and loss of the current period. For other types of financial assets, related transaction costs areincluded in their initial recognized amounts. In terms of the accounts receivable or notes receivablearising from selling products or providing labor service without or not considering major financingcomponent, the Company shall regard them as the initial recognition amount at the expectedconsideration amount that it has rights to charge.
1) Assets carried at amortized cost
With the business model where the Company manages the financial assets carried at amortized cost,the Company aims to charge the contract cash flows, and the characteristics of such contract cashflows of this kind of financial assets are consistent with the basic lending arrangements. That is,cash flows generated on specified dates are solely payments of principal and interest on theprincipal amount outstanding. This kind of financial assets are subsequently measured at amortizedcost using the effective interest method. Gain or loss arising from amortization or impairment isrecognized in profit and loss of the current period.
2) Financial assets at fair value through other comprehensive income
The business model for managing the financial assets aims at both obtaining the contract cash flowsand selling the financial assets, and the characteristics of such contract cash flows of this kind offinancial assets are consistent with the basic lending arrangements. The Company measures thiskind of financial assets at fair value through other comprehensive income, but recognizes theimpairment losses or gains, exchange profit and loss, and interest income calculated by the effectiveinterest method as the profit and loss of the current period.Additionally, the Company designates some non-tradable equity instruments as financial assets atfair value through other comprehensive income. The Company recognizes relevant dividend incomefrom such financial assets as the profit and loss of the current period, and changes in fair value asother comprehensive income. When such financial assets are derecognized, the accumulated gainsor losses previously recognized as other comprehensive income shall be transferred from othercomprehensive income to retained earnings and not recognized as the profit and loss of the currentperiod.
3) Financial assets at fair value through profit and loss of the current periodThe above financial assets measured at amortized cost and financial assets other than thosemeasured at fair value through other comprehensive income are classified as financial assets at fairvalue through profit and loss of the current period. Moreover, at initial recognition, to eliminate orsignificantly reduce accounting mismatches, the Company can designate some financial assets asfinancial assets at fair value through profit and loss of the current period. Such financial assets shallbe measured at fair value, and changes in fair value are recognized as the profit and loss of thecurrent period.
(2) Classification, recognition, and measurement of financial liabilitiesAt initial recognition, financial liabilities are classified into financial liabilities at fair value throughprofit or loss and other financial liabilities. For financial liabilities at fair value through profit andloss of the current period, transaction costs are directly included in profit and loss of the currentperiod. For other types of financial liabilities, related transaction costs are included in their initialrecognized amounts.
1) Financial liabilities at fair value through profit and loss of the current periodFinancial liabilities at fair value through profit and loss of the current period include tradablefinancial liabilities (including derivatives belonging to financial liabilities) and financial liabilitiesdesignated to measured at fair value through profit and loss of the current period at initialrecognition.Tradable financial liabilities (including derivatives that are financial liabilities) are subsequentlymeasured at fair value, and changes in fair value -- except for those related to hedging accounting --are recognized as profit and loss of the current period.In terms of the financial liabilities designated at fair value through profit or loss, the changes in fairvalue resulting from changes in the credit risk of the Company shall be recognized as othercomprehensive income; besides, when such liabilities are derecognized, the amount of accumulativechanges in fair value resulting from credit risk changes that are recognized as other comprehensiveincome shall be transferred to retained earnings. Other changes in fair value shall be recognized asthe profit and loss of the current period. If the processing of the credit risk changes in such financialliabilities by the above methods will result in expansion of the accounting mismatch in the profitand loss, the Company shall recognize all gains or losses in such financial liabilities (including theamount subject to the credit risk changes of the Company) as the profit and loss of the currentperiod.
2) Other financial liabilities
Except for the financial asset transfer not meeting the conditions for derecognition or the financialliabilities or financial guarantee contract resulting from continuous involvement in the transferredfinancial assets, other financial liabilities shall be classified into the financial liabilities measured atamortized cost, which shall be subsequently measured at amortized cost, and the gains or lossesresulting from derecognition or amortization shall be recognized as the profit and loss of the currentperiod.
(3) Recognition basis and measurement method of financial asset transferOnce one of the following conditions is met, the financial assets shall be derecognized: 1) Thecontract right to charge the cash flows of the financial assets is terminated; 2) the financial assetshave been transferred, and almost all the risks and rewards of the ownership of the financial assetsare transferred to the transferee; 3) the financial assets have been transferred, and the Company hasgiven up the control over the financial assets although it does not transfer or retain almost all therisks and rewards of the ownership of the financial assets.If the Company has neither transferred nor retained almost all the risks and rewards of theownership of the financial assets, and the Company does not waive its control of the financial assets,it shall recognize the relevant financial assets within the extent of its continuous involvement in thetransferred financial assets and recognize the relevant liabilities. The continuous involvement in thetransferred financial assets refers to the level of risk with which the Company is faced due tochanges in the financial asset values.
When overall transfer of financial assets meets the conditions for derecognization, the book value ofthe transferred financial assets and the difference between the consideration received due to transferand the accumulative changes in fair value that is originally recognized as other comprehensiveincome shall be recognized as the profit and loss of the current period.When partial transfer of financial assets meets the conditions for derecognization, the book value ofthe transferred financial assets shall be apportioned to the fair value between the derecognized partand the recognized part, and the consideration received due to transfer and the difference betweenthe accumulative changes in fair value that is originally recognized as other comprehensive income,which shall be apportioned to the derecognized part, and the apportioned the book value asmentioned above shall be recognized as the profit and loss of the current period.When the Company sells financial assets with additional recourse or transfers the endorsed financialassets held, it shall check whether almost all the risks and rewards of the ownership of the financialassets are transferred. If the Company has transferred almost all the risks and rewards of theownership of the financial assets to the transferee, it shall derecognize the financial assets; if theCompany retains almost all the risks and rewards of the ownership of the financial assets, it shallnot derecognize the financial assets; if the Company neither transfers nor retains almost all the risksand rewards of the ownership of the financial assets, it shall judge whether it has retained controlover the assets and conduct accounting processing following the principles described in previousparagraphs.
(4) Derecognition of financial liabilities
If current obligations of the financial liabilities (or some of the liabilities) have been released, theCompany shall derecognize the financial liabilities (or some of the liabilities). Where the Company(borrower) and a lender sign an agreement to replace the existing financial liability by way ofassumption of new financial liability with the terms of the new financial liability substantiallydifferent from those of the existing financial liability, it derecognizes the existing financial liabilitywhile recognizing the new financial liability. If the contract terms of the existing financial liabilityare materially changed in whole (or in part), the existing financial liability will be derecognized,and the financial liability after changes of terms will be recognized as a new financial liability.If a financial liability is derecognized in whole (or in part), the difference between the book value ofthe derecognized portion and the consideration paid (including the non-cash assets transferred outor the new financial liability assumed) is recognized as the profit and loss of the current period.
(5) Offsetting financial assets and financial liabilities
When the Company has the statutory right to offset the recognized amount of financial assets andfinancial liabilities, and this statutory right is currently enforceable, and the Company plans to netthe financial assets or simultaneously realize the financial assets and pay off the financial liabilities,the financial assets and financial liabilities are presented in the balance sheet at the net amount afteroffsetting each other. In addition, financial assets and financial liabilities are presented separately inthe balance sheet and are not offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilitiesThe fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date. If there are active marketsfor a financial instrument, the Company will establish its fair value by using quotes in the activemarkets. Quotes in active markets refer to prices that are readily available on a regular basis fromexchanges, brokers, trade associations, pricing service institutions, etc., and represent the prices ofmarket transactions that actually occur in a fair trade. If there is no active market, the Company
establishes fair value by using valuation techniques. Valuation techniques include referring to priceused in recent market transactions between knowledgeable, willing parties, taking into account thecurrent fair value of other financial instruments that is substantially the same, discounted cash flowanalysis and option pricing models, etc. During valuation, the Company adopts the valuationtechniques that are applicable under current circumstances and that are supported by sufficientavailable data and other information, and selects the input values that are consistent with thecharacteristics of the assets or liabilities considered by the market participants in the transaction ofthe relevant assets or liabilities, and preferentially uses the relevant observable inputs. Unobservableinput values are used where the relevant observable input values are not available or are notpracticable.
(7) Equity instruments
An equity instrument refers to a contract that can prove the Company owns the remaining equity inthe assets after deducting all liabilities. The Company's issuance (including refinancing), repurchase,sales or cancellation of equity instruments are treated as changes in equities, and transaction costsrelated to equity transactions are deducted from equities. The Company does not recognize changesin the fair value of equity instruments.The distribution of dividends (including the "interest" generated by the instruments classified asequity instruments) during the existence of the Company's equity instruments shall be treated asprofit distribution.
(8) Impairment of financial assets
The financial assets for which the Company needs to recognize impairment losses are financialassets measured at amortized cost, debt instrument investments measured at fair value through othercomprehensive income, and lease receivable, mainly including notes receivable, accountsreceivable, and other receivables. In addition, for some financial guarantee contracts, impairmentreserves are set aside and credit impairment losses are recognized as per the accounting policiesdescribed in this section.
1) Methods for recognizing impairment reserves
Based on the expected credit loss, the Company sets aside provisions for impairment of the aboveitems by methods (general method or simplified method) for measuring expected credit lossapplicable to them and recognizes credit impairment loss.Credit loss refers to the difference between all contract cash flow receivable discounted at theoriginal effective interest rate under the contract and all expected cash flow receivable, i.e., thepresent value of all cash shortages. Specifically, for financial assets that have been credit-impairedat the time of purchase or origin, the Company discounts the financial assets at the credit-adjustedactual interest rate.The general method for measuring expected credit loss means that the Company assesses on eachbalance sheet date whether the credit risk of financial assets has increased significantly since theinitial recognition. If yes, the Company measures loss reserves at an amount equivalent to theexpected credit loss in the entire duration; if not, the Company measures loss reserves at an amountequivalent to the expected credit loss in the next 12 months. The Company considers all reasonableand evidence-based information, including forward-looking information, when assessing expectedcredit loss;As for financial instruments with low credit risk on the balance sheet date, the Company measuresthe loss reserves according to the expected credit loss in the future 12 months, assuming that its
credit risk has had no significant increase since its initial recognition. The Company chooses tomeasure loss reserves according to the expected credit loss in the next 12 months or in the entireduration based on whether the credit risk has increased significantly since initial recognition.
2) Standards for judging whether credit risk has increased significantly since initial recognitionIf the probability of default (PD) of a financial asset in the expected duration recognized on thebalance sheet date is significantly higher than that in the expected duration recognized at the time ofinitial recognition, the credit risk of the financial asset has increased significantly. Except forspecial circumstances, the Company determines whether credit risk has increased significantly sinceinitial recognition by reasonably assessing the changes in the PD in the entire duration with thechanges in the coming 12 months.
3) Portfolio method for assessing expected credit risk based on portfoliosThe Company assesses individual credit risk of financial assets with significantly different creditrisks. Examples include the following: Receivables from related parties; receivables that havedisputes with counterparties or those involved in litigation or arbitration; there are obvious signsthat the debtor is very unlikely to fulfill the repayment obligation.In addition to financial assets whose individual credit risk is assessed, the Company dividesfinancial assets into different groups based on common risk characteristics, and assesses credit riskon a portfolio basis.
4) Accounting processing methods for impairment of financial assetsAt the end of the reporting period, the Company calculates the expected credit loss of financialassets. If the expected credit loss is greater than the book value of its current impairment provisions,the difference is recognized as an impairment loss; if it is less than the current book value of theimpairment provisions, the difference is recognized as impairment gains.
5) Methods for recognizing credit losses of financial assets
a. Notes receivableThe Company measures loss reserves for notes receivable at an amount equivalent to expectedcredit loss in the entire duration. The Company divides notes receivable into different portfoliosbased on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Banker's acceptance | Acceptors are banks with low credit risk. |
| Trade acceptance | The aging of trade acceptance is used as credit risk characteristics. |
b. Accounts receivableThe Company measures loss reserves for accounts receivable without major financing component atan amount equivalent to expected credit loss in the entire duration.The Company measures loss reserves for accounts receivable and lease receivables with majorfinancing component at an amount equivalent to expected credit loss in the duration.Except for accounts receivable whose individual credit risk is assessed, the Company dividesaccounts receivable into different portfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Aging portfolio | The aging of accounts receivable is used as credit risk characteristics. |
| Related party portfolio | Proceeds of related parties within the scope of consolidation. |
c. Other receivablesThe Company adopts the amount equivalent to the expected credit loss in the coming 12 months orin the entire duration to measure impairment losses based on whether the credit risk of otherreceivables has increased significantly since initial recognition. Except for other receivables whoseindividual credit risk is assessed, the Company divides other receivables into different portfoliosbased on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Aging portfolio | The aging of other receivables is used as credit risk characteristics. |
| Related party portfolio | Proceeds of related parties within the scope of consolidation. |
11. Notes receivable
See "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financialinstruments" for details.
12. Accounts receivable
See "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financialinstruments" for details.
13. Accounts receivable financing
None
14. Other receivables
Recognition methods and accounting processing methods for expected credit loss in otherreceivablesSee "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financialinstruments" for details.
15. Inventories
(1) Classification of inventories
Inventories mainly include raw materials, goods in process, materials for consigned processing,commodity stocks, packages, and low-value consumables.
(2) Pricing methods for inventory acquisition and delivery
Inventories are priced at actual cost when they are acquired. Inventory costs include theprocurement cost, processing cost, and other costs. Inventories are priced by the weighted averagemethod during receipt and delivery.
(3) Methods for recognition of the net realizable value of inventories and the provisions forimpairment of inventoriesThe net realizable value refers to the amount of the estimated selling price of the inventory minusthe estimated cost, estimated selling expenses, and related taxes and fees at the time of completion
in daily activities. When recognizing the net realizable value of inventories based on the substantialevidence obtained, the Company also considers the purpose of holding the inventories and theimpact on matters after the balance sheet date.On the balance sheet date, inventories are measured at the lower of costs and the net realizablevalue. When the net realizable value is lower than costs, the Company sets aside provisions forinventory impairment. Provisions for inventory impairment are set aside based on the differencebetween the cost of individual inventory item and its net realizable value.After provisions for the inventory impairment are set aside, if the influencing factors in previouswrite-down of the inventory value disappear, causing the net realizable value of the inventory to behigher than its book value, it shall be reversed within the amount of the provisions for inventoryimpairment that have been set aside and recognized as the profit and loss of the current period.
(4) The perpetual inventory system is adopted for the inventories.
(5) Amortization method for low-value consumables and packages
The one-time amortization method is adopted for low-value consumables and packages uponreceipt.
16. Contract assets
None
17. Contract costs
None
18. Assets held for sale
The Company classifies non-current assets or a disposal group as held for sale (including exchangeof non-monetary assets with commercial substance, the same below) if their book values arerecovered principally through disposal rather than through continuing use. Specifically, thefollowing conditions shall be met simultaneously: A certain non-current asset or disposal group canbe sold immediately under the current conditions according to the practice of selling such assets ordisposal groups in similar transactions; the Company has made a resolution of an offer and obtainedthe purchase commitment; the sale is expected to be completed within one year. Among them, thedisposal group refers to a group of assets that are disposed of as a whole through sale or othermeans in a transaction, and the liabilities directly related to these assets that are transferred in thetransaction. If the asset group or the combination of asset groups to which the goodwill (obtainedfrom business combination) has been allocated in accordance with the Accounting Standards forBusiness Enterprises No. 8 -- Impairment of Assets, the disposal group shall include the goodwillallocated to it.During initial measurement or re-measurement of the non-current assets and disposal groupsclassified into held-for-sale assets on the balance sheet date, if the book value of such assets ishigher than the net value deducting the cost of offer, the book value is written down to therecoverable amount by the Company, the written-down amount is recognized as profit and loss ofthe current period and impairment provisions are set aside at the same time. For the disposal group,the recognized asset impairment loss is first deducted from the book value of the goodwill in thedisposal group, and then deducted in proportion from the book value of non-current assets specifiedin the applicable Accounting Standards for Business Enterprises No. 42 - Non-Current Assets andDisposal Groups Held for Sale and Discontinued Operations ("Standards for Assets Held for Sale").If the fair value of the disposal group held for sale on the subsequent balance sheet date increases
after deducting the selling expenses, the previously written down amount shall be restored, andreversed within the amount of the asset impairment losses recognized for non-current assets as perthe Standards for Assets Held for Sale applicable after the assets are classified into those held forsale, and the reversed amount shall be recognized as the profit and loss of the current period.Besides, the book value of the reversed amount shall be increased in proportion according to theproportion of the book value of the non-current assets specified in the Standards for Assets Held forSale applicable to those except for the goodwill in the disposal group. The book value of thegoodwill that has been deducted, and the asset impairment losses recognized before the non-currentassets are classified into assets held for sale as per the Standards for Assets Held for Sale shall notbe reversed.Non-current assets held for sale and non-current assets in the disposal group are not subject todepreciation or amortization. Interest and other expenses on liabilities in the disposal group held forsale continue to be recognized.When the non-current assets or disposal group no longer meets the conditions for classification intothe assets held for sale, the Company no longer classifies them into the category or removes thenon-current assets from the disposal group held for sale, and measures them at the lower of thefollowing two: (1) In terms of the book value before classification into assets held for sale, themeasurement standard is the amount after adjustment according to the depreciation, amortization, orimpairment that should have been recognized under the assumption that they are not classified intoassets held for sale; and (2) the recoverable amount.
19. Investments in creditor's rights
None
20. Other investments in creditor's rights
None
21. Long-term receivables
None
22. Long-term equity investments
The long-term equity investments herein refer to the long-term equity investments in which theCompany has control, joint control, or significant influence on the investee. Long-term equityinvestments where the Company has no control, joint control, or significant influence on theinvestee are accounted as financial assets measured at fair value through profit and loss of thecurrent period. Among them, as for those that are non-tradable, the Company may choose todesignate them as the financial assets measured at fair value through other comprehensive incomefor accounting during initial recognition. See "Note V, 10" for their detailed accounting policies.Joint control refers to the common control over a particular arrangement according to relevantagreement, and that the decisions on relevant activities under such arrangement are subject to theunanimous consent from the parties sharing the joint control. Significant influence means havingthe power to participate in the financial and operating policy decision-making of the investee, butcannot control or, together with other parties, jointly control the formulation of these policies.
(1) Determination of investment cost
For long-term equity investments obtained from combination of enterprises under common control,the share of the combined party's owner's equity in the book value of the consolidated financialstatements of the final controlling party which is acquired on the combination day shall be regarded
as the initial investment cost for long-term equity investments. The capital reserves shall beadjusted if there is difference between the initial investment cost of long-term equity investment andthe cash paid, the transferred non-cash assets, and the book value of the debts assumed; if thecapital reserve is insufficient to offset, the retained earnings shall be adjusted. If the equitysecurities issued are used as the combination consideration, the share of the combined party'sowner's equity in the book value of the consolidated financial statements of the final controllingparty which is acquired on the combination day shall be regarded as the initial investment cost forlong-term equity investments; the total book value of the shares issued shall be the share capital; thecapital reserves shall be adjusted if there is difference between the initial investment cost oflong-term equity investments and the total book value of the shares issued; if the capital reserves areinsufficient to balance the difference, retained earnings shall be adjusted.For long-term equity investments obtained from combination of enterprises under different control,the combination costs on the acquisition date shall be used as the initial investment costs of thelong-term equity investment; the combination costs include the sum of the assets paid by theacquirer, the liabilities incurred or assumed, and the fair value of the equity securities issued.Intermediary expenses such as auditing, legal services, assessment and consulting and other relatedmanagement expenses incurred by the combining party or acquirer for the business combinationshall be recognized as the profit and loss of the current period.Other equity investments except for long-term equity investments formed via business combinationare initially measured at cost. Subject to the way the long-term equity investments are obtained, thecosts shall be recognized based on the cash actually paid by the Company for acquisition, the fairvalue of the equity securities issued by the Company, the value agreed in the investment contract oragreement, the fair value or original book value of the assets swapped out in a non-monetary assetexchange transaction, and the fair value of the long-term equity investment itself. Expenses, taxes,and other necessary expenditures directly related to acquisition of long-term equity investments arealso recognized as investment costs.
(2) Subsequent measurement and recognition of profit and loss
If the Company has common control or significant influence over the investee (except forconstituting co-proprietors), the long-term equity investment shall be accounted for by using theequity method. Additionally, applying the cost method to the Company's financial statements canmake controlled long-term equity investments in the investee.
1) Long-term equity investments accounted for using the cost methodWhen using cost method, the long-term equity investments are calculated according to the initialinvestment cost. In the event that the investment is added or recovered, the cost of the long-termequity investments shall be adjusted. With the exception of the price actually paid at the acquisitionof investment or cash dividends or profits included in consideration, declared but not issued yet, thereturn on investment of the current period shall be recognized according to the cash dividends orprofits declared to be issued by the investee.
2) Long-term equity investments accounted for using the equity methodWhen using equity method, if the initial investment cost of long-term equity investments is greaterthan the fair value share of the identifiable net assets entitled of the investee at the time ofinvestment, the initial investment of the long-term equity investments shall not be adjusted. If theinitial investment cost of long-term equity investments is lower than the fair value share of theidentifiable net assets entitled of the investee at the time of investment, the difference shall berecognized as profit and loss of the current period and the cost of the long-term equity investments
shall be adjusted at the same time.When using equity method, return on investment and other comprehensive income shall berespectively determined based on the share of net profit or loss and other comprehensive incomerealized by the investee that shall be attributable or assumed and the book value of long-term equityinvestments shall be adjusted. Attributable share shall be calculated based on the profit or cashdividends declared by the investee and the book value of long-term equity investments shall beaccordingly decreased. In respect to other changes of owner's equity of the investee in addition tonet profit or loss, other comprehensive income and profit distribution, the book value of long-termequity investments shall be adjusted and recognized as capital surplus. When confirming the shareof the investee's net profit and loss, the Company shall confirm the investee's net profit afteradjustment based on the fair value of the identifiable net assets of the investee at the acquisition ofthe investment. Where the accounting policy and accounting period adopted by the investee differsfrom those of the Company, the investee's financial statements shall be adjusted according to theCompany's accounting policy and accounting period, and the return on investment and othercomprehensive income shall be recognized accordingly. Where the transactions between theCompany and the associates and joint ventures, and the assets that are invested or sold do notconstitute business, unrealized internal transaction profits and losses incurred between the Companyand the associates and joint ventures shall be offset with the part attributable to the Company whichis calculated on a due pro-rata basis, and the return on investment shall be recognized on this basis.However, unrealized internal transaction losses incurred between the Company and the investeesshall not be offset if they fall under the impairment losses on assets transferred.When confirming the limit of net loss incurred by the investee, the limit is the extent that the bookvalue of the long-term equity investments and other long-term equity that substantially constitutes anet investment in the investment target is written down to zero. Additionally, if the Company hasobligations to assume additional losses of the investee, accrued liabilities are recognized accordingto the expected obligation, and recognized as investment losses for the period. Where the investeerecords net profit in the future, the Company resumes and recognizes the profit-sharing amountafter such amount makes up the unrecognized loss-sharing amount.
23. Investment real estate
Measurement model for investment real estateMeasurement by the cost methodDepreciation or amortization methodInvestment properties are held to generate rental income or earn capital gains or both and is notoccupied. Investment properties include land use rights leased out, land use rights held for transferafter appreciation, buildings leased out, etc.Investment real estate is initially measured at cost. Subsequent costs are included in the investmentreal estate's book value, only when it is probable that future economic benefits associated with theitem will flow to the Company and the cost of the item can be measured reliably; Other subsequentexpenses are recognized as profit and loss of the current period when incurred.The Company adopts the cost model for subsequent measurement of investment real estate, anddepreciates or amortizes the building based on its expected service life or land use right.Impairment test method and impairment provision method for investment real estate are detailed in"Note V, 31".Investment properties are derecognized when they are disposed of, or permanently withdrawn from
use and it is expected that no economic benefit can be generated from its disposal. The income fromselling, transferring, writing off or destroying investment real estate, less its book value and relevanttaxes and fees, is recognized as profit and loss of the current period.
24. Fixed assets
(1) Recognition conditions
Fixed assets are tangible assets with a useful life of more than one accounting year that are held forproduction or supply of goods or labor services, for rental to third parties, or for use in theorganizations.Fixed assets shall only be recognized when relevant economic interest may flow into the Companyand costs thereof can be reliably measured. Fixed assets shall be initially measured at cost and bytaking into account the impact of estimated disposal expense.
(2) Depreciation method
| Type | Depreciation method | Depreciation life | Residual value rate | Annual depreciation rate |
| Properties and buildings | Straight-line depreciation | 20 years and 30 years | 5% and 10% | 3.00%, 3.17%, 4.50% and 4.75% |
| Equipment | Straight-line depreciation | 10 years to 20 years | 5% and 10% | 4.50%, 4.75% to 9.0%, 9.50% |
| Motor vehicles | Straight-line depreciation | 5 years, 8 years and 14 years | 5% and 10% | 6.43%, 6.79%, 11.25%, 11.88%, 18.00% and 19.00% |
| Office equipment | Straight-line depreciation | 5 years and 8 years | 5% and 10% | 11.25%, 11.88%, 18.00% and 19.00% |
| Production equipment | Straight-line depreciation | 1 year to 5 years | 5% and 10% | 18.00%, 19.00%, 30.00%, 31.67%, 45.00% and 47.50% |
Estimated residual value refers to the current amount where, supposed the service life of a fixedasset has expired and it is in the expected status of such expiration, the Company obtains from thedisposal of such asset after the estimated disposal expense is deducted.
(3) Determination basis, pricing method and depreciation method of fixed assets acquiredunder finance leasesLeases of assets where substantially all the risks and rewards of ownership have been transferredare classified as finance leases. Title may or may not eventually be transferred. The fixed assetleased in through finance leases adopts the same depreciation policy for the finance leased assets asthose for which it has title rights. If the fixed asset can be reasonably ascertained that the ownershipof the asset leased can be obtained by the expiration of the tenancy, the asset is depreciated over itsservice life; if not, the asset is depreciated over the shorter of the tenancy and the service life of theleased asset.
25. Construction in process
Construction in progress is measured at actual project expenditure, comprising project expenditureincurred during construction and other necessary cost incurred.The Company's construction in progress is transferred to fixed assets when the assets are ready fortheir intended use. If the constructed fixed assets have reached the expected usable status but havenot yet completed the final account for completed project, they shall be recognized as fixed assetsaccording to the estimated value, and accrued depreciation. After the completion of the final
account for completed project, the original estimated value is adjusted according to the actual cost,but the original accrued depreciation amount is not adjusted.Impairment test method and impairment provision method for construction in progress are detailedin "Note V, 31".
26. Borrowing costs
Borrowing costs include interest on borrowings, amortizations of discounts or premiums, incidentalexpenses, exchange difference resulting from foreign-currency borrowings, etc. The borrowingcosts that can be directly attributable to the acquisition, construction or production of an asseteligible for capitalization shall be capitalized if the capital expenditures have been incurred, theborrowing costs have been incurred, or the necessary purchase, construction or production activitiesto make the assets reach the expected available or marketable state have begun. When the assetswith the purchase, construction or production meeting the capitalization conditions reach theexpected available or marketable state, they cease to be capitalized. Any other borrowing costs arerecognized as an expense in the period when they are incurred.The amount of interest that shall be capitalized is determined based on the interest expensesincurred in the period when a specifically borrowed fund is obtained less any income earned on theunused borrowing fund as a deposit in a bank or as a temporary investment. Where funds areborrowed for a general purpose, the amount of interest that shall be capitalized is determined bymultiplying the part of the accumulative asset disbursements in excess of the weighted average assetdisbursement for the specifically borrowed fund by the capitalization rate of the general borrowingused. The capitalization rate is the weighted average interest rates applicable to the general-purposeborrowings.During the capitalization, all exchange differences arising from earmarked foreign-currencyborrowings shall be capitalized; exchange differences arising from general-purposeforeign-currency borrowings shall be recognized as profit and loss of the current period.Assets eligible for capitalization refer to assets such as fixed assets, investment real estates andinventories that can reach the expected available or marketable status after a long period ofpurchase, construction or production activities.If the acquisition, construction or production of an asset eligible for capitalization is continuouslysuspended for over three months for abnormal reasons, capitalization of the borrowing costs shallbe suspended, until the acquisition, construction or production of the asset is resumed.
27. Biological assets
None
28. Oil & gas assets
None
29. Right-of-use assets
None
30. Intangible assets
(1) Pricing method, service life, and impairment test
Intangible assets refer to identifiable non-monetary assets without physical substance owned orcontrolled by the Company.
Intangible assets are initially measured at cost. Costs are included in intangible assets' book value,only when it is probable that future economic benefits associated with the item will flow to theCompany and the cost of the item can be measured reliably. The expenses on other items arerecognized as profit and loss of the current period when incurred.Land use rights acquired are generally accounted for as intangible assets. With respect to self-builtbuildings including plants, the relevant land use right expenses and buildings' construction costs areaccounted for as intangible assets and fixed assets, respectively. The price paid for the house andbuilding purchased are distributed between the land use right and the building. If it is difficult todistribute, it shall all be included in fixed assets.From the beginning of use of intangible assets with finite service life, the accumulated amount ofthe original value less estimated net residual value and the provisions for asset impairment set asideshall be amortized evenly in stages by straight-line method over their service life. Intangible assetswith uncertain service lives are not amortized.The Company reviews the service life and amortization method of intangible asset with finiteservice life at the end of the reporting period, and a change therein (if any) shall be accounted for asa change in accounting estimates. Additionally, the Company reviews the service life andamortization method of intangible asset with uncertain service life. If there is evidence that theperiod when it brings economic benefits to the enterprise is foreseeable, its service life shall beestimated and it is amortized according to the amortization policy for intangible assets with limitedservice life.Impairment test method and impairment provision method for intangible assetsImpairment test method and impairment provision method for intangible assets are detailed in "NoteV, 31".
(2) Accounting policy for expenditure on internal research and developmentThe Company classifies the expenditure on an internal research and development project intoexpenditure on the research phase and expenditure on the development phase.Expenditure on the research phase is recognized as profit and loss of the current period whenincurred.Expenditure on the development phase is recognized intangible asset when all the following criteriaare met, while expenditure in the development phase that does not meet the following criteria isrecognized as profit and loss of the current period when incurred.
1) the technical feasibility of completing the intangible asset so that it will be available for use orsale;
2) the intention to complete the intangible asset and use or sell it;
3) how the intangible asset will generate probable future economic benefits. Among other things,the Company can demonstrate the existence of a market for the output of the intangible asset or theintangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
4) the availability of adequate technical, financial and other resources to complete the developmentand the ability to use or sell the intangible asset;
5) the ability to measure reliably the expenditure attributable to the intangible asset during thedevelopment.Where the expenditure on research and development incurred cannot be classified into the
expenditure on research phase or the expenditure on development, it shall be recognized as profitand loss of the current period when incurred.
31. Long-term assets impairment
The Company determines on the balance sheet date whether there is any indication that thenon-current and non-financial assets may been impaired, including fixed assets, construction inprogress, intangible assets with limited service life, and investment real estate measured using thecost model, long-term assets of subsidiaries, joint ventures and associates. If there is any indicationthat the asset is likely to be impaired, the Company will estimate the recoverable amount and carryout the impairment test. Impairment tests shall be conducted each year for goodwill and intangibleassets with uncertain service life and not yet in use, whether or not there is any indication ofimpairment.If an impairment test shows that the recoverable amount of an asset is lower than its book value, thedifference is recognized as a provision for impairment and recognized as the impairment loss. Therecoverable amount is determined based on the higher of the net amount of the fair value of theasset minus the disposal expenses and the present value of the expected future cash flow of the asset.The fair value of asset is determined according to the price of the sales agreement in fair trade. Ifthere is no sales agreement but active assets in the market exist, the fair value is determinedaccording to the price offered by the buyer of the asset. If there is neither sales agreement nor activeassets in the market, the fair value of the asset shall be estimated based on the best informationavailable. The disposal costs include legal fees, relevant taxes and fees, as well as handling fessrelated to the disposal of asset, and the direct costs incurred to ensure the asset reaches themarketable state. The present value of the expected future cash flow of an asset shall be determinedby the discounted cash at an appropriate discount rate, on the basis of the expected future cash flowgenerated during the continuous use or final disposal of an asset. Provisions for asset impairmentare calculated and recognized on an individual basis. If it is difficult to estimate the recoverableamount of individual assets, the Company will determine the recoverable amount of the asset groupon the basis of the asset group to which the asset belongs. Asset group refers to the smallest assetportfolio which can independently generate cash inflows.When an impairment test is performed on the goodwill separately listed in the financial statement,book value of such goodwill is apportioned to the asset group or combination of asset groups thatcan benefit from the synergy effect of business combination. If the test result shows that therecoverable amount of the asset group or combination of asset groups is lower than their book value,corresponding impairment losses on goodwill will be recognized. The impairment loss shall firstoffset against the book value that is apportioned to asset group or a combination of asset groups,and then offset against the book value of assets excluding goodwill in the asset group or thecombination of asset groups on a pro-rata basis according to the proportion of their book value.Once the aforementioned asset impairment loss is recognized, it will not be reversed in subsequentaccounting periods even if the value can be recovered.
32. Long-term unamortized expenses
Long-term unamortized expenses are expenses which have been incurred but shall be amortizedover a period longer than one year, including the reporting period and the future periods. Long-termunamortized expenses shall be amortized based on the straight-line method over the expectedbenefit period.
33. Contract liabilities
A contract liability is the Group's obligation to transfer goods or services to a customer for which
the Group has received consideration from the customer.Contract assets and liabilities within a single contract should be presented on a net basis. If the netamount is debit balance, it shall be presented in the item of "contract assets" or "other non-currentassets" based on its liquidity. If the net amount is credit balance, it shall be presented in the item of"contract liabilities" or "other non-current liabilities" based on its liquidity.
34. Employee remuneration
(1) Accounting treatment method for short-term remuneration
The Company's employee remuneration mainly includes short-term remuneration, post-employmentbenefits, and dismissal benefits. Wherein:
Short-term remuneration includes salaries, bonuses, allowances and subsidies, employee welfare,medical insurance fees, maternity insurance fees, employment injury insurance fees, housingprovident funds, labor union fees, staff education funds, and non-monetary welfare. The Companyshall, within the accounting period when its employees provide service, recognize actual short-termremuneration as liabilities which shall be recognized as profit and loss of the current period orrelevant asset costs. Including, non-monetary benefits are measured at fair value.
(2) Accounting treatment method for post-employment benefits
Post-employment benefit includes basic endowment insurance, unemployment insurance, etc. Italso includes defined contribution plans. Where defined contribution plans are adopted, thecorresponding amount payable shall be recognized as profit and loss of the current period orrelevant asset costs in which it is incurred.
(3) Accounting treatment method for dismissal benefits
If the Company terminates the labor relationship with an employee before the employee's laborcontract expires, or proposes to give the employee compensation for encouraging the employee tovoluntarily accept dismissal, when the Company cannot unilaterally withdraw the termination of thelabor relationship plan or the dismissal proposal, or recognize the costs related to the restructuringof the payment of the dismissal benefits, whichever is earlier, the liabilities arising from thecompensation give to the employee for the termination of the labor relationship with the employeeshall be recognized and recognized as profit and loss of the current period. However, if it isexpected that the dismissal benefits cannot be paid in full within twelve months after the end of theannual reporting period, they shall be accounted for according to other long-term employeeremunerations.Internal retirement schemes for employees shall be accounted for following the same principles ofthe above dismissal benefits. Where the salaries and social insurance fees of early retirees to be paidthe Company from the date when employees stop providing services to the normal retirement datemeet the recognition conditions for projected liabilities, they shall be recognized as profit and lossof the current period.
(4) Accounting treatment method for other long-term employee benefitsOther long-term benefits provided by the Company to employees that meet the conditions of thedefined contribution plan are accounted for in accordance with the defined contribution plan; otherlong-term benefits are accounted for in accordance with the defined benefit plan.
35. Lease liabilities
None
36. Accrued liabilities
An obligation related to contingent issues and meeting the following conditions shall be deemed anaccrued liability: (1) such an obligation is a current one assumed by the Company; (2) fulfillingsuch an obligation might cause economic benefits to flow out of the Company; and (3) the amountof such an obligation is measurable reliably.On the balance sheet date, a provision is measured at the best estimate of the expenditure requiredto settle the related present obligation, with comprehensive consideration of factors such as the risks,uncertainty and time value of money relating to a contingency.An accrued liability is separately recognized as an asset and the recognized compensation amountshall not exceed the book value of the accrued liability, when all or part of the expenses required topay off the accrued liability are expected to be compensated by a third party and the amount ofcompensation is basically determined to be receivable.
37. Share-based payment
Share-based payment is the transaction made through granting equity instruments or bearing theliabilities recognized based on such instruments in exchange for services rendered by employees orother parties. The Company's share-based payment includes equity-settled share-based payment andcash-settled share-based payment.
(1) Equity-settled share-based payment
Where the share payment is settled through equity for acquisition of service from employees, itshall be measured at the fair value of the equity instruments granted to the employees. If the rightcannot be exercised until the vesting period ends or until the prescribed performance conditions aremet, the amount of such fair value shall, based on the best estimate of the number of vested equityinstruments, be recognized as the relevant costs or expenses by straight-line method/if the right canbe exercised immediately following the grant, the amount of such fair value shall be recognized asthe relevant costs or expenses on the grant date, and the capital reserve shall be increasedaccordingly.On each balance sheet date within the vesting period, the Company carries out the best estimationbased on such follow-up information as the variation of the number of vested staff acquired recently,and revises the number of estimated vested equity instruments. The impact of the above estimatesshall be recognized as the relevant costs or expenses of the current period, and the capital reserveshall be adjusted accordingly.For an equity-settled share-based payment in return for the service of any other party, if the fairvalue of the service of any other party can be reliably measured, it shall be measured at the fairvalue of the service of any other party on the acquisition date; if the fair value of the service of anyother party can not be reliably measured, but the fair value of the equity instruments can be reliablymeasured, it shall be measured at the fair value of the equity instruments on the acquisition date andincluded in the relevant costs or expenses, and the shareholders' equity shall be increasedcorrespondingly.
(2) Cash-settled share payment
The cash-settled share-based payment shall be measured at the fair value of the Company'sliabilities determined based on shares or other equity instruments. If the right may be exercisedimmediately after the grant, relevant costs or expenses shall be recognized the grant date, and theliabilities shall be increased accordingly. If the right may not be exercised until the vesting periodends or until the specified performance conditions are met, on each balance sheet date within the
vesting period, the services obtained in the current period shall, based on the best estimate of theinformation about the exercisable right, be recognized as the relevant costs or expenses at the fairvalue of the liability undertaken by the Company.The fair value of liabilities is re-measured and any change thereto is recognized as profit and loss ofthe current period on each balance sheet date and settlement date prior to settlement of the relevantliabilities.
38. Preference shares, perpetual bonds and other financial instrumentsNone
39. Revenue
Accounting policy for recognition and measurement of revenueThe revenue is recognized when the customers take control of the relevant goods or services if thecontract between the Company and the customers meet all the following conditions: 1) the parties tothe contract has approved such contract and undertake to perform their respective obligations; 2) thecontract has specified the rights and obligations of the parties thereto and in connection with thetransfer of goods or provision of labor services; 3) the contract sets out clear payment terms relatedto the transfer of goods; 4) the contract has commercial substance, meaning that the performancethereof will change the risk, time distribution or amount of the Company's future cash flow; 5) theCompany is very likely to recover the consideration obtained by transferring goods to customers.On the enforcing date of the contract, the Company identifies all individual performance obligationsin the contract, and apportions the transaction price to each individual performance obligationaccording to the relative proportion of the individual selling price of the goods. When determiningthe transaction price, the Company has considered the impact of such factors including variableconsideration, major financing component of the contract, non-cash consideration, andconsideration payable to the customer.With respect to each individual performance obligation of the contract, the Company will recognizethe transaction price apportioned to such obligation based on the progress of performance during therelevant performance periods, if any of the following conditions is met: 1) the customer obtains andconsumes the economic benefits brought by the Company's performance during such performance;
2) the customer can control the goods in progress during the Company's performance; 3) the goodsproduced from the Company's performance has irreplaceable use, and in respect of the portion ofrevenue arising from the Company's performance completed to date, the Company is entitled torecognize revenue during the entire validity period of the contract. The progress of performance isdetermined according to the nature of the transferred goods using the input or output method. Whensuch progress cannot be reasonably determined, if the costs incurred are expected to becompensated, the Company recognizes revenue based on the amount of costs incurred, until theprogress of performance can be reasonably determined.If none of the aforesaid conditions is met, the Company will recognize the transaction priceapportioned to such individual performance obligation when the customer obtains the control overrelevant goods. To decide whether the customer has obtained the control over goods, the Companytakes into account the following indications: 1) the enterprise has the present right to collection forthe goods, meaning the customer bears the present obligation to payment for the goods; 2) theenterprise has passed the legal title to the goods to the customer, meaning the customer has had thelegal title to the goods; 3) the enterprise has transferred the physical possession of the goods to thecustomer, meaning the customer has had the physical possession of the goods; 4) the enterprise hastransferred the major risks and remunerations concerning the title to the goods to the customer,
meaning the customer has obtained the major risks and remunerations concerning the title to thegoods; 5) the customer has accepted the goods; 6) other indications to show that the customer hasobtained the control over the goods.Different business models are adopted for different businesses, which may lead to the differences inthe accounting policy for recognition of revenue.
40. Government grants
Government grants are monetary or non-monetary assets acquired by the Company from thegovernment free of charge, excluding the capital invested by the government as an investor andgranted corresponding owner's equity. Government grants are classified into government grantsrelated to assets and government grants related to income. The Company defines the governmentgrants for purchasing or constructing or otherwise forming long-term assets as asset-relatedgovernment grants; other government grants are defined as the income-related government grants.Government grants shall be measured at the amount received or receivable if they are monetaryassets. Non-monetary government grants shall be measured at fair value; if the fair value cannot bereliably obtained, they shall be measured at the nominal amount. The government grants measuredat the nominal amount shall be directly recognized as the profit and loss of the current period.Asset-related government grants are recognized as deferred income, and as profit and loss of thecurrent period in stages according to a reasonable and systematic method over the service life of therelevant assets. The income-related government grants shall be recognized as deferred income ifthey are used to compensate relevant expenses or losses in subsequent periods, and shall berecognized as profit and loss of the current period during the recognition of related expenses; thegrants used to compensate related expenses or losses incurred shall be directly recognized as profitand loss of the current period.The government grants related to both assets and income shall be accounted for by distinguishingdifferent parts; if it is difficult to distinguish, they shall be, as a whole, classified as income-relatedgovernment grants.Government grants related to the Company's daily activities shall be recognized as other profit andloss or write down relevant costs according to the essence of economic business; those unrelated tothe Company's daily activities shall be recognized as non-operating income and expenditure.If the recognized government grants need to be returned and there is relevant deferred incomebalance, the book balance of relevant deferred income shall be written off, and the excess shall berecognized as profit and loss of the current period; otherwise, government grants shall be directlyrecognized as profit and loss of the current period.
41. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
On the balance sheet date, the Company measures a current tax liability (or asset) arising from thecurrent and prior period based on the amount of income tax expected to be paid by the Company (orreturned by tax authority) calculated by related tax laws. The taxable income which is the basis forcalculation of the current income tax is calculated after appropriate adjustments to the pretaxaccounting profits for the reporting period.
(2) Deferred income tax assets/deferred income tax liabilities
For the difference between the book value of certain assets and liabilities and their tax bases, andthe temporary differences between the book values and the tax bases of items, the tax bases of
which can be determined for tax purposes, but which have not been recognized as assets andliabilities according to the tax laws, the Company recognizes deferred income tax assets anddeferred income tax liabilities using the balance sheet debt method.Where the taxable temporary differences arise from the initial recognition of goodwill and the initialrecognition of an asset or liability arising from the transaction that is not a business combination,nor at the time of the transaction, affects neither accounting profit and taxable profit (or deductibleloss), the relevant deferred income tax liability shall not be recognized. Additionally, in respect oftaxable temporary difference associated with to investments in subsidiaries, joint ventures andassociates, where the Company can control the timing of the reversal of the temporary differencesand it is probable that the temporary differences will not be reversed in the foreseeable future, therelevant deferred income tax liability shall not be recognized. Other than the above exceptions, theCompany shall recognize deferred income tax liabilities arising out from all other taxable temporarydifferences.Where the taxable temporary differences arise from the initial recognition of an asset or liabilityarising from the transaction that is not a business combination, nor at the time of the transaction,affects neither accounting profit and taxable profit (or deductible loss), the relevant deferred incometax liability shall not be recognized. Additionally, in respect of taxable temporary differenceassociated with to investments in subsidiaries, joint ventures and associates, where it is probablethat the temporary differences will not be reversed in the foreseeable future or taxable profit will notbe available against which the deductible temporary differences can be utilized in the future, therelevant deferred income tax liability shall not be recognized. Other than the above exceptions, theCompany recognizes a deferred tax asset for other deductible temporary differences, to the extentthat it is probable that future taxable profit will be available against which the deductible temporarydifferences can be utilized.The tax effects of deductable losses and taxes available for carrying over are recognized as an assetwhen it is probable that future taxable profits would be available against which these losses can beutilized.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that areexpected to apply to the period when the asset is realized or the liability is settled, according to therequirements of tax laws.The book value of deferred tax assets is reviewed at the balance sheet date and written down to theextent that it is no longer probable that sufficient taxable profit will be available in future periods toallow the deferred tax assets to be utilized. Such write-downs is reversed when it becomes probablethat sufficient taxable profits will be available.
(3) Income tax expenses
Income taxes comprise current income tax and deferred income tax.The current income tax and deferred income tax expense or income is recognized as the profit andloss of the current period except for the current income tax and deferred income tax related totransactions or events, that are recognized as other comprehensive income or directly recognized asshareholders' equity, and thus recognized as other comprehensive income or shareholders' equity,and for the book value of goodwill adjusted due to deferred income tax arising from businesscombination.
42. Leases
(1) Accounting treatment method for operating lease
(1) The Company records operating lease business as the lessee
Lease payments under an operating lease are recognized on a straight-line basis over the lease term,and recognized as the cost of the related asset or as profit and loss of the current period. Initialdirect costs are recognized as the profit and loss of the current period. Contingent rentals arerecognized as profit and loss of the current period when they are actually incurred.
(2) The Company records operating lease business as the lessor
Lease income under an operating lease are recognized on a straight-line basis over the lease term,and recognized as profit and loss of the current period. The large-amount initial direct costs arecapitalized when incurred, and recognized as profit and loss of the current period on the same basisas the recognized lease income over the lease term; the small-amount initial direct costs arerecognized as profit and loss of the current period when incurred. Contingent rentals are recognizedas profit and loss of the current period when they are actually incurred.
(2) Accounting treatment method for finance lease
Leases of assets where substantially all the risks and rewards of ownership have been transferredare classified as finance leases. Title may or may not eventually be transferred.
43. Other important accounting policies and accounting estimatesNone
44. Changes in important accounting policy and accounting estimates
(1) Key changes to accounting policies
√ Applicable □ Inapplicable
| Contents and reasons for changes to accounting policies | Approval procedure | Remarks |
| On July 5, 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 14 -- Revenue (C.H. [2017] No. 22), requiring the enterprises listed both within the borders and abroad, as well as the enterprises listed abroad and adopting IFRS or Accounting Standards for Business Enterprises to prepare financial statements, to implement the revised Standards from January 1, 2018; other enterprises listed at home shall implement the revised Standards from January 1, 2020. | On February 25, 2020, the Company convened the 21st meeting of the fourth Board of Directors and the 17th meeting of the fourth Board of Supervisors of the Company, and approved the Proposal on Changes to Accounting Policies. | Details can be found in the Announcement on Changes to Accounting Policies (Announcement No.: 2020-10) on February 26, 2020 on CNINFO (http://www.cninfo.com.cn). |
(1) Implementation of the changes to accounting policies caused by new Revenue StandardsOn July 5, 2017, the Ministry of Finance revised the Accounting Standards for Business EnterpriseNo. 14 - Revenues (C.H. [2017] No. 22) (hereinafter referred to as the "new Revenue Standards").
The new Revenue Standards were reviewed and approved at the 21st meeting of the fourth Board ofDirectors on February 25, 2020, and the Company started to implement such standards fromJanuary 1, 2020.The new Revenue Standards established a new model for recognition of revenue to regulate therevenues generated by the contracts with customers. To implement the new Revenue Standards, theCompany re-evaluated the recognition, measurement, accounting, and presentation of mainrevenues from contracts. Pursuant to the new Revenue Standards, the Company only adjusted theaccumulative number of impacts of the contracts to be completed on January 1, 2020. TheCompany adjusted the amount of retained return at the beginning of the current period (i.e. January1, 2020) and the amount of other relevant items in the financial statements based on theaccumulative number of impacts of the first implementation, except the information of thecomparable period.
(2) Main changes and impacts regarding the implementation of the new Revenue Standards are asfollows:
The Company changes the contract consideration collected from customers in advance for transferof goods from the item "accounts received in advance" to the item "contract liabilities" forpresentation.The Company's implementing the new Revenue Standards does not impact the retained return at thebeginning of 2020, and its impacts on other relevant items in the financial statements dated January1, 2020 are as follows:
| Statement items | Amount on December 31, 2019 (prior to changes) | Amount on January 1, 2020 (after changes) | ||
| Consolidation | Reports of the parent company | Consolidation | Reports of the parent company | |
| Accounts received in advance | 142,476,562.31 | 28,227,454.47 | ||
| Contract liabilities | 142,476,562.31 | 28,227,454.47 | ||
(2) Key changes in accounting estimates
□ Applicable √ Inapplicable
(3) Since 2020, the adjustment of relevant items of the financial statements at the beginning ofthe year for the first time according to the implementation of the new standards for income,and the new leasing standards for the first time.RulesWhether to adjust the subjects of the balance sheet at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment number |
| Current assets: | |||
| Monetary funds | 703,746,624.42 | 703,746,624.42 |
| Settlement reserve | |||
| Lending to banks and other financial institutions | |||
| Tradable financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 301,904.32 | 301,904.32 | |
| Accounts receivable | 807,772,897.68 | 807,772,897.68 | |
| Accounts receivable financing | |||
| Prepayments | 14,877,757.16 | 14,877,757.16 | |
| Premium receivable | |||
| Reinsurance payables | |||
| Reinsurance contract reserves receivable | |||
| Other receivables | 8,240,417.99 | 8,240,417.99 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets held under resale agreements | |||
| Inventory | 986,405,689.17 | 986,405,689.17 | |
| Contract assets | |||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 | |
| Non-current assets due within one year | |||
| Other current assets | 165,567,805.78 | 165,567,805.78 | |
| Total current assets | 2,743,986,156.21 | 2,743,986,156.21 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Credit right investments | |||
| Other credit right investments | |||
| Long-term receivable | |||
| Long-term equity investment | |||
| Investment in other equity instruments | |||
| Other non-current assets | |||
| Investment property | 36,039,381.30 | 36,039,381.30 | |
| Property and equipment | 2,921,392,106.87 | 2,921,392,106.87 | |
| Construction work in progress | 55,734,236.91 | 55,734,236.91 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 168,731,781.83 | 168,731,781.83 | |
| Development expenses | |||
| Goodwill | 64,654.15 | 64,654.15 | |
| Long-term deferred expenses | 13,686,397.24 | 13,686,397.24 | |
| Deferred income tax assets | 80,331,080.17 | 80,331,080.17 | |
| Other non-current assets | 6,306,028.96 | 6,306,028.96 | |
| Total non-current assets | 3,282,285,667.43 | 3,282,285,667.43 | |
| Total assets | 6,026,271,823.64 | 6,026,271,823.64 | |
| Current liabilities: | |||
| Short-term loans | 14,721,492.38 | 14,721,492.38 | |
| Borrowings from PBC | |||
| Placements from banks and other financial institutions | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 202,653,860.31 | 202,653,860.31 | |
| Accounts payable | 578,212,781.22 | 578,212,781.22 | |
| Payments received in advance | 142,476,562.31 | -142,476,562.31 | |
| Contract liabilities | 142,476,562.31 | 142,476,562.31 | |
| Proceeds from financial assets sold under repo |
| Customer bank deposits and due to banks and other financial institutions | |||
| Funds from securities trading agency | |||
| Funds from securities underwriting agency | |||
| Employee remuneration payable | 106,413,600.27 | 106,413,600.27 | |
| Tax and fees payable | 101,670,618.11 | 101,670,618.11 | |
| Other payables | 635,834,511.05 | 635,834,511.05 | |
| Including: Interests payable | 173,259.89 | 173,259.89 | |
| Dividends payable | 452,536.50 | 452,536.50 | |
| Transaction fee and commission receivable | |||
| Reinsurance payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 32,400,000.00 | 32,400,000.00 | |
| Other current liabilities | |||
| Total current liabilities | 1,814,383,425.65 | 1,814,383,425.65 | |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term Loans | 22,500,000.00 | 22,500,000.00 | |
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 82,367,831.33 | 82,367,831.33 | |
| Deferred income tax liabilities | 30,016,107.43 | 30,016,107.43 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 134,883,938.76 | 134,883,938.76 | |
| Total liabilities | 1,949,267,364.41 | 1,949,267,364.41 | |
| Owner's equity: | |||
| Share capital | 1,308,891,273.00 | 1,308,891,273.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 760,731,416.57 | 760,731,416.57 | |
| Less: Treasury shares | 104,792,649.00 | 104,792,649.00 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 53,205,582.86 | 53,205,582.86 | |
| General reserves | |||
| Retained earnings | 2,058,968,835.80 | 2,058,968,835.80 | |
| Total equity attributable to the owners of the parent company | 4,077,004,459.23 | 4,077,004,459.23 | |
| Equities of minority shareholders | |||
| Total owner's equity | 4,077,004,459.23 | 4,077,004,459.23 | |
| Total liabilities and owners' equities | 6,026,271,823.64 | 6,026,271,823.64 |
Explanation of adjustmentThe parent company's balance sheet
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment number |
| Current assets: | |||
| Monetary funds | 156,202,659.45 | 156,202,659.45 | |
| Tradable financial assets | |||
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 127,203,426.87 | 127,203,426.87 | |
| Accounts receivable financing | |||
| Prepayments | 2,565,716.66 | 2,565,716.66 | |
| Other receivables | 637,511,752.54 | 637,511,752.54 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventory | 84,567,041.98 | 84,567,041.98 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 129,377,576.74 | 129,377,576.74 | |
| Total current assets | 1,137,428,174.24 | 1,137,428,174.24 | |
| Non-current assets: | |||
| Credit right investments | |||
| Other credit right investments | |||
| Long-term receivable | |||
| Long-term equity investment | 1,231,245,128.96 | 1,231,245,128.96 | |
| Investment in other equity instruments | |||
| Other non-current assets | |||
| Investment property | 18,745,192.09 | 18,745,192.09 | |
| Property and equipment | 222,724,273.70 | 222,724,273.70 | |
| Construction work in progress | 35,260,100.44 | 35,260,100.44 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 21,259,498.66 | 21,259,498.66 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | |||
| Deferred income tax assets | 18,366,334.29 | 18,366,334.29 | |
| Other non-current assets | 4,521,074.21 | 4,521,074.21 | |
| Total non-current assets | 1,552,121,602.35 | 1,552,121,602.35 | |
| Total assets | 2,689,549,776.59 | 2,689,549,776.59 | |
| Current liabilities: | |||
| Short-term loans | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 325,506,510.90 | 325,506,510.90 | |
| Payments received in advance | 28,227,454.47 | -28,227,454.47 | |
| Contract liabilities | 28,227,454.47 | 28,227,454.47 | |
| Employee remuneration payable | 24,280,403.99 | 24,280,403.99 | |
| Tax and fees payable | 3,225,793.88 | 3,225,793.88 | |
| Other payables | 167,279,884.09 | 167,279,884.09 | |
| Including: Interests payable | |||
| Dividends payable | 452,536.50 | 452,536.50 | |
| Liabilities held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | |||
| Total current liabilities | 548,520,047.33 | 548,520,047.33 |
| Non-current liabilities: | |||
| Long-term Loans | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 7,062,818.69 | 7,062,818.69 | |
| Deferred income tax liabilities | 5,575,323.82 | 5,575,323.82 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 12,638,142.51 | 12,638,142.51 | |
| Total liabilities | 561,158,189.84 | 561,158,189.84 | |
| Owner's equity: | |||
| Share capital | 1,308,891,273.00 | 1,308,891,273.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 690,241,724.38 | 690,241,724.38 | |
| Less: Treasury shares | 104,792,649.00 | 104,792,649.00 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 53,084,248.58 | 53,084,248.58 | |
| Retained earnings | 180,966,989.79 | 180,966,989.79 | |
| Total owner's equity | 2,128,391,586.75 | 2,128,391,586.75 | |
| Total liabilities and owners' equities | 2,689,549,776.59 | 2,689,549,776.59 |
Explanation of adjustment
(4) Explanation of the retrospective adjustment of previous comparable data according to theimplementation of the new Revenue Standards and the new leasing standards for the firsttime in 2020.
□ Applicable √ Inapplicable
45. Others
VI. Taxes
1. Main tax types and tax rates
| Taxes | Tax basis | Tax rate |
| Value-added tax | Taxable VAT (calculated based on the difference of deducting the amount of input tax which is allowed to be deducted in the current period from the result of multiplying taxable sales by applicable tax rate) | 13% |
| City construction and maintenance tax | Turnover tax paid | 5% and 7% |
| Corporate income tax | Taxable income | 15%, 16.5%, 20%, 25%, progressive rate |
| Education surcharges | Turnover tax paid | 3% |
| Local education surcharges | Turnover tax paid | 2% |
Explanation of disclosure if different income tax rates apply to different corporate taxpayers
| Name of taxpayer | Income tax rate |
| C&S Paper Co., Ltd., Zhongshan Zhongshun Trading Co., Ltd., C&S (Hubei) Paper Co., Ltd., Xiaogan C&S Trading Co., Ltd., Zhejiang Zhongshun Paper Co., Ltd., Chengdu Zhongshun Paper Co., Ltd., Hangzhou Jie Rou Trading Co., Ltd., Shanghai Huicong Paper Co., Ltd., Beijing C&S Paper Co., Ltd., C&S (Yunfu) Trading Co., Ltd., and Sun Daily Necessities Co., Ltd. | 25% |
| C&S (Zhongshan) Paper Co., Ltd., and C&S (Dazhou) Paper Co., Ltd. | 20% |
| Zhong Shun International Co., Ltd., and C&S Hong Kong Co., Ltd. (Note 1) | 16.50% |
| Jiangmen Zhongshun Paper Co., Ltd., C&S (Sichuan) Paper Co., Ltd., and C&S (Yunfu) Paper Co., Ltd. | 15% |
| C&S (Macao) Co., Ltd. (Note 2) | Progressive rate |
2. Tax incentive
C&S (Sichuan) Paper Co., Ltd. was certified as a high-tech enterprise of Sichuan Province in 2017,and was awarded the Certificate of High-tech Enterprise (No. GR201751001108), with a valid termof three years, on December 4, 2017. C&S (Sichuan) Paper Co., Ltd. filed a new application forcertification of high-tech enterprise on June 22, 2020, which is being reviewed as at the reportingdate. In accordance with the relevant provisions of the Announcement of the State Administration ofTaxation on Issues concerning the Implementation of the Preferential Income Tax Policiesregarding High-tech Enterprises (G.J.SH.W.Z.J.G.G. [2017] No. 24), the corporate income tax istentatively calculated at a tax rate of 15% during the reporting period.C&S (Yunfu) Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in2017, and was awarded the Certificate of High-tech Enterprise (No. GR201744007263), with avalid term of three years, on December 11, 2017. C&S (Yunfu) Paper Co., Ltd. filed a newapplication for certification of high-tech enterprise on July 9, 2020, which is being reviewed as atthe reporting date. In accordance with the relevant provisions of the Announcement of the StateAdministration of Taxation on Issues concerning the Implementation of the Preferential Income TaxPolicies regarding High-tech Enterprises (G.J.SH.W.Z.J.G.G. [2017] No. 24), the corporate incometax is tentatively calculated at a tax rate of 15% during the reporting period.Jiangmen Zhongshun Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Provincein 2018, and was awarded the Certificate of High-tech Enterprise (No. GR201844008474), with avalid term of three years, on November 28, 2018. Therefore, the corporate income tax is tentativelycalculated at a tax rate of 15% in 2020.In accordance with the relevant provisions of the Announcement of the State Administration ofTaxation on Issues Concerning the Implementation of the Inclusive Income Tax Deduction andExemption Policies for Small Low-profit Enterprises (G.J.SH.W.Z.J.G.G. [2019] No. 2), the policyon inclusive income tax deduction and exemption for small low-profit enterprises is applicable toC&S (Zhongshan) Paper Co., Ltd. and C&S (Dazhou) Paper Co., Ltd. in 2019. To be specific, theannual taxable income of these two enterprises that is not more than RMB1 million shall beincluded in their taxable income at the reduced rate of 25%, with the applicable corporate incometax rate of 20%; and the annual taxable income that is not less than RMB1 million nor more thanRMB3 million shall be included in their taxable income at the reduced rate of 50%, with theapplicable enterprise income tax rate of 20%.
3. Others
Note 1: C&S Hong Kong Co., Ltd. is a Hong Kong-based company incorporated according to thelaw of Hong Kong, and adopts the tax laws thereof. The tax rate for its income tax is 16.50%;Note 2: C&S (Macao) Co., Ltd. is a Macao-based company incorporated according to the law ofMacao. Its complementary tax adopts a progressive rate (tax on taxable income that is less thanMOP300,000 is exempted, and the taxable income that is more than MOP300,000 is taxed at 12%).VII. Notes on Items in Consolidated Financial Statement
1. Monetary capital
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Cash on hand | 81,123.62 | 76,152.38 |
| Bank deposits | 892,229,613.53 | 675,589,471.75 |
| Other monetary funds | 41,163,239.82 | 28,081,000.29 |
| Total | 933,473,976.97 | 703,746,624.42 |
| Including: Total deposits in overseas banks | 29,173,507.30 | 63,089,915.23 |
Other descriptionsBalance of other monetary capital at the end of the reporting period is the balance of issuing lettersof credit, bank acceptance bill deposit and balance of Alipay. Refer to "Note VII, 81" forcircumstances where monetary capital ownership is restricted.
2. Transactional financial assets: None
3. Derivative financial assets: None
4. Notes receivable
(1) Classified notes receivable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Bank acceptance bill | 608,962.30 | 301,904.32 |
| Total | 608,962.30 | 301,904.32 |
Bad debts reserve set aside individually: NoneBad debts reserves set aside in portfolios: NoneBad debts reserves set aside in portfolios: NoneBad debts reserves set aside in portfolios: NoneIf the bad debts reserve of notes receivable is set aside according to general model of expectedcredit loss, please refer to the disclosure method of other receivables to disclose relevantinformation on bad debts reserve:
□ Applicable √ Inapplicable
(2) Bad debts reserve that is set aside, recovered or transferred backProvision of bad debts reserve of the reporting period:
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period isimportant:
□ Applicable √ Inapplicable
(3) The notes receivable that the Company has pledged at the end of the reporting period:
None
(4) Notes receivable that the Company has endorsed or discounted at the end of the reportingperiod and are not due on the date of the balance sheet: None
(5) Notes that are transferred to notes receivable because the drawer does not perform thecontract at the end of the reporting period: NoneOther descriptions
1. The Company has no pledged notes receivable as at June 30, 2020.
2. The Company has no derecognized notes receivable that are endorsed or discounted but not dueas at June 30, 2020.
3. The Company has no notes that are transferred to notes receivable because the drawer does notperform the contract as at June 30, 2020.
(6) The notes receivable actually written off in the reporting periodSignificant write-offs of notes receivable wherein: NoneDescription of write-offs of notes receivable: None
5. Accounts receivable
(1) Accounts receivable disclosed by categories
Unit: RMB
| Type | Balance at the end of the year | Balance at the beginning of the year | ||||||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Accounts receivable for which bad debts reserve is set aside individually | 34,567,651.21 | 4.05% | 10,681,068.59 | 30.90% | 23,886,582.62 | 34,567,651.21 | 4.11% | 10,681,068.59 | 30.90% | 23,886,582.62 |
| Wherein: | ||||||||||
| Accounts receivable for which bad debts reserve is set aside in portfolios | 819,792,390.62 | 95.95% | 21,601,843.43 | 2.64% | 798,190,547.19 | 805,681,115.48 | 95.89% | 21,794,800.42 | 2.71% | 783,886,315.06 |
| Wherein: | ||||||||||
| According to portfolio of age | 819,792,390.62 | 95.95% | 21,601,843.43 | 2.64% | 798,190,547.19 | 805,681,115.48 | 95.89% | 21,794,800.42 | 2.71% | 783,886,315.06 |
| Total | 854,360,041.83 | 100.00% | 32,282,912.02 | 3.78% | 822,077,129.81 | 840,248,766.69 | 100.00% | 32,475,869.01 | 3.87% | 807,772,897.68 |
Bad debts reserve set aside individually: 10,681,068.59
Unit: RMB
| Name | Balance at the end of the year | |||
| Book balance | Impairment provision | Provision ratio | Reason for provision | |
| Institution I | 6,288,113.54 | 2,462,996.13 | 39.17% | It is difficult to recover all loans due to the poor business performance of the customer |
| Institution II | 28,279,537.67 | 8,218,072.46 | 29.06% | It is difficult to recover all loans due to the poor business performance of the customer |
| Total | 34,567,651.21 | 10,681,068.59 | -- | -- |
Bad debts reserve set aside individually:
Bad debts reserve set aside in portfolios: 21,601,843.43
Unit: RMB
| Name | Balance at the end of the year | ||
| Book balance | Impairment provision | Provision ratio | |
| Within the credit period | 690,347,064.80 | 13,806,941.30 | 2.00% |
| Credit period - one year | 121,303,456.17 | 6,065,172.81 | 5.00% |
| Summary within one year | 811,650,520.97 | 19,872,114.11 | 2.45% |
| One to two years | 6,471,482.40 | 970,722.36 | 15.00% |
| Two to three years | 380,933.36 | 114,280.01 | 30.00% |
| Over three years | 1,289,453.89 | 644,726.95 | 50.00% |
| Total | 819,792,390.62 | 21,601,843.43 | -- |
Description of reason for the portfolio:
Accounts receivable with the same age have similar credit risk characteristics.Bad debts reserves set aside in portfolios:
Description of reason for the portfolio: NoneBad debts reserves set aside in portfolios:
Description of reason for the portfolio:
If the bad debts reserve of accounts receivable is set aside according to general model of expectedcredit loss, please refer to the disclosure method of other receivables to disclose relevantinformation on bad debts reserve:
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
| Aging | Balance at the end of the year |
| Within one year (inclusive) | 811,650,520.97 |
| One to two years | 6,471,482.40 |
| Two to three years | 14,599,234.74 |
| Over three years | 21,638,803.72 |
| Three to four years | 14,348,062.08 |
| Four to five years | 7,290,741.64 |
| Over five years | 0.00 |
| Total | 854,360,041.83 |
(2) Bad debts reserve that is set aside, recovered or transferred backProvision of bad debts reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the year | Amount of change in the reporting period | Balance at the end of the year | |||
| Provision | Recovery or transfer back | Write-offs | Others | |||
| Accounts receivable | 32,475,869.01 | -79,019.13 | 113,937.86 | 32,282,912.02 | ||
| Total | 32,475,869.01 | -79,019.13 | 113,937.86 | 32,282,912.02 | ||
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period isimportant: None
(3) The accounts receivable actually written off in the reporting period
Unit: RMB
| Item | Written-off amount |
| The accounts receivable actually written off | 113,937.86 |
Significant write-offs of accounts receivable wherein:
Explanation on write-offs of accounts receivable: None
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the reporting period | Percentage of total balance of accounts receivable at the end of the reporting period | Closing balance for bad debts reserve |
| 1st | 210,108,337.32 | 24.59% | 4,223,694.59 |
| 2nd | 97,821,774.06 | 11.45% | 2,698,303.33 |
| 3rd | 65,171,610.18 | 7.63% | 1,712,866.44 |
| 4th | 28,279,537.67 | 3.31% | 8,218,072.46 |
| 5th | 26,129,086.73 | 3.06% | 522,581.73 |
| Total | 427,510,345.96 | 50.04% |
(5) Accounts receivable derecognized due to the transfer of financial assetsThe Company has no accounts receivable derecognized due to the transfer of financial assets at theend of the reporting period
(6) Amount of assets and liabilities that are formed by the transfer and ongoing involvementof accounts receivableNoneOther explanations:
6. Accounts receivable financing
Increase and decrease and changes in fair value of accounts receivable financing in the reportingperiod
□ Applicable √ Inapplicable
If the provisions for asset impairment of accounts receivable financing is set aside according togeneral model of expected credit loss, please refer to the disclosure method of other receivables todisclose relevant information on provisions for asset impairment:
□ Applicable √ Inapplicable
Other explanations:
None
7. Prepayments
(1) Prepayments listed as follows based on age
Unit: RMB
| Aging | Balance at the end of the year | Balance at the beginning of the year | ||
| Amount | Percentage | Amount | Percentage | |
| Within one year | 42,999,445.80 | 99.98% | 14,430,801.70 | 97.00% |
| One to two years | 8,604.17 | 0.02% | 446,955.46 | 3.00% |
| Total | 43,008,049.97 | -- | 14,877,757.16 | -- |
Explanation on the reason of untimely settlement of prepayments whose age exceed one year withsignificant amount: None
(2) Top five payees in closing balance of prepayment
The total amount of the top five payees in closing balance of prepayment of the Company isRMB30,319,748.68, accounting for 70.50% of closing balance of prepayment.Other explanation: None
8. Other receivables
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Other receivables | 32,122,559.84 | 8,240,417.99 |
| Total | 32,122,559.84 | 8,240,417.99 |
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Important dividends receivable exceeding one year: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
Other explanation: None
(3) Other receivables
1) Classification by the nature of amount of other receivables
Unit: RMB
| Nature of amount | Book balance at the end of the period | Book balance at the beginning of the period |
| Margins and deposits | 4,339,916.45 | 4,098,736.90 |
| Current accounts | 3,684,770.85 | 3,395,872.47 |
| Reserve | 3,198,671.09 | 1,621,094.57 |
| Others | 23,525,358.51 | 255,741.34 |
| Total | 34,748,716.90 | 9,371,445.28 |
2) Provision of bad debts reserve
Unit: RMB
| Impairment provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| As at January 1, 2020 | 1,131,027.29 | 1,131,027.29 | ||
| Balance as at January 1, 2020 in the reporting period | - | - | - | - |
| Provision in the reporting period | 1,502,718.88 | 1,502,718.88 | ||
| Write-offs in the reporting period | 7,589.11 | 7,589.11 | ||
| Balance as at June 30, 2020 | 2,626,157.06 | 2,626,157.06 |
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
| Aging | Balance at the end of the year |
| Within one year (inclusive) | 31,022,416.69 |
| One to two years | 2,183,982.42 |
| Two to three years | 1,078,349.94 |
| Over three years | 463,967.85 |
| Three to four years | 42,454.05 |
| Four to five years | 37,613.80 |
| Over five years | 383,900.00 |
| Total | 34,748,716.90 |
3) Bad debts reserve that is set aside, recovered or transferred backProvision of bad debts reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the year | Amount of change in the reporting period | Balance at the end of the year | |||
| Provision | Recovery or transfer back | Write-offs | Others | |||
| Other receivables | 1,131,027.29 | 1,502,718.88 | 7,589.11 | 2,626,157.06 | ||
| Total | 1,131,027.29 | 1,502,718.88 | 7,589.11 | 2,626,157.06 | ||
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period isimportant: None
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Written-off amount |
| Other receivables actually written off | 7,589.11 |
Wherein, write-offs of important other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of amount | Balance at the end of the year | Aging | Percentage of total closing balance of other receivables | Closing balance for bad debts reserve |
| 1st | Others | 22,214,407.06 | Within one year | 63.93% | 1,110,720.35 |
| 2nd | Margins and deposits | 1,100,000.00 | One to two years | 3.17% | 165,000.00 |
| 3rd | Margins and | 900,000.00 | One to two years, | 2.59% | 390,000.00 |
| deposits | more than five years | ||||
| 4th | Margins and deposits | 700,000.00 | Two to three years, more than five years | 2.01% | 230,000.00 |
| 5th | Others | 552,656.91 | Within one year | 1.59% | 27,632.85 |
| Total | -- | 25,467,063.97 | -- | 73.29% | 1,923,353.20 |
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement ofother receivables: None
9. Inventory
Whether the Company needs to comply with requirements for disclosure in the real estate industryNo
(1) Categories of inventories
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year | ||||
| Book balance | Provision for impairment of inventories or provisions for contract cost | Book value | Book balance | Provision for impairment of inventories or provisions for contract cost | Book value | |
| Raw materials | 741,974,493.37 | 17,983.97 | 741,956,509.40 | 524,569,054.30 | 11,942.85 | 524,557,111.45 |
| Work-in-process products | 38,706,917.29 | 418,858.03 | 38,288,059.26 | 47,577,009.45 | 357,365.13 | 47,219,644.32 |
| Commodity stocks | 350,379,404.14 | 2,147,334.68 | 348,232,069.46 | 375,752,356.14 | 1,562,936.40 | 374,189,419.74 |
| Packages | 21,916,829.27 | 85,423.46 | 21,831,405.81 | 24,152,524.80 | 154,311.71 | 23,998,213.09 |
| Low-value consumables | 12,537,164.54 | 726,782.65 | 11,810,381.89 | 11,353,098.88 | 675,834.25 | 10,677,264.63 |
| Materials for consigned processing | 16,800,079.57 | 0.00 | 16,800,079.57 | 5,764,035.94 | 5,764,035.94 | |
| Total | 1,182,314,888.18 | 3,396,382.79 | 1,178,918,505.39 | 989,168,079.51 | 2,762,390.34 | 986,405,689.17 |
(2) Provision for impairment of inventories or provisions for contract cost
Unit: RMB
| Item | Balance at the beginning of the year | Increase in the current period | Decrease in the current period | Balance at the end of the year | ||
| Provision | Others | Reversal or charging off | Others | |||
| Raw materials | 11,942.85 | 21,931.63 | 15,890.51 | 17,983.97 | ||
| Work-in-process products | 357,365.13 | 379,338.93 | 317,846.03 | 418,858.03 | ||
| Commodity stocks | 1,562,936.40 | 1,302,458.45 | 718,060.17 | 2,147,334.68 | ||
| Packages | 154,311.71 | 102,826.92 | 171,715.17 | 85,423.46 | ||
| Low-value consumables | 675,834.25 | 296,598.14 | 245,649.74 | 726,782.65 | ||
| Materials for consigned processing | ||||||
| Total | 2,762,390.34 | 2,103,154.07 | 1,469,161.62 | 3,396,382.79 |
(3) Explanation that balance of inventory at the end of the reporting period include amount ofcapitalization of borrowing costs: None
(4) Explanation on amortized amount in the reporting period of contract cost: None
10. Contract assets
If the bad debts reserve of contrast assets is set aside according to general model of expected creditloss, please refer to the disclosure method of other receivables to disclose relevant information onbad debts reserve:
□ Applicable √ Inapplicable
Provision for impairment of contract assets in the reporting period: None
11. Assets held for sale
Unit: RMB
| Item | Book balance at the end of the period | Impairment provision | Closing book value of the period | Fair value | Estimated disposal fee | Estimated disposal time |
| Immovable assets of the old factory of Hubei C&S (including land use rights) | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | December 31, 2020 | ||
| Total | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | -- |
Other explanations:
In December 2019, the Company signed an agreement on acquiring the immovable assets of the oldfactory of Hubei C&S (including land use rights) upon consultation with Xiaonan District People'sGovernment of Xiaogan Municipality to boost the investment and building of Phase II of the programof high-end household paper in the industrial zone in the Economic Development Area of XiaonanDistrict, Xiaogan Municipality. The Company believed that the immovable assets of the old factoryof Hubei C&S (including land use rights) can be sold immediately in the current situation, accordingto similar transactions where such assets were sold. The Company signed a purchase agreement withlegal constraints with Xiaogan Changxing Investment Co., Ltd. and Xiaonan District People'sGovernment of Xiaogan Municipality regarding the transfer of such assets in December 2019. TheAgreement included important terms and conditions including the price and time of the transaction aswell as penalty for breach of contract that is strict enough. Therefore, the is little possibility of theAgreement to be significantly changed or canceled. The Company estimated that the ultimate transferwill be completed before December 2020. Therefore, immovable assets of the old factory of Hubei
C&S (including land use rights) was classified as assets held for sale by the Company.According to evaluation, the price of immovable assets of the old factory of Hubei C&S (includingland use right) was RMB66,285,100 in total. It is estimated that there are no fees for the sale otherthan relevant taxes and fees related to normal sale.
12. Non-current assets due within one year: None
13. Other current assets
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Reverse repos of treasury bonds | 87,105,000.00 | |
| Wealth management products | 212,400,000.00 | 40,000,000.00 |
| Input VAT to be deducted | 34,003,305.66 | 32,822,256.90 |
| Prepaid corporate income tax | 5,689,760.50 | 5,640,548.88 |
| Total | 252,093,066.16 | 165,567,805.78 |
Other explanation: None
14. Investments in creditor's rights
Important investment in creditor's rights: NoneProvisions for asset impairment
Unit: RMB
| Impairment provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| Balance as at January 1, 2020 in the reporting period | - | - | - | - |
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
15. Other investments in creditor's rights
Important other investment in creditor's rights: NoneProvisions for asset impairment
Unit: RMB
| Impairment provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| Balance as at January 1, 2020 in the | - | - | - | - |
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
16. Long-term receivables
(1) Long-term receivables
Impairment of bad debts reserve
Unit: RMB
reporting periodImpairment provision
| Impairment provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| Balance as at January 1, 2020 in the reporting period | - | - | - | - |
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
(2) Long-term receivables derecognized due to the transfer of financial assets: None
(3) Amount of assets and liabilities that are formed by the transfer and ongoing involvementof long-term receivables: NoneOther explanation: None
17. Long-term equity investment
Other explanation: None
18. Investment in other equity instruments
Disclosure of investments in non-tradable equity instruments of the reporting period by item: None
19. Other non-current financial assets
Other explanation: None
20. Investment real estate
(1) Investment real estate measured at cost
√ Applicable □ Inapplicable
Unit: RMB
| Item | Buildings | Land use rights | Construction work in progress | Total |
| I. Original Book Value | ||||
| 1. Balance at the | 31,142,650.03 | 21,661,131.29 | 52,803,781.32 |
| beginning of the year | ||||
| 2. Increase in the current period | ||||
| (1) External purchase | ||||
| (2) Inventory\PP&E\Transfer from construction in progress | ||||
| (3) Increase in business combination | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Closing balance | 31,142,650.03 | 21,661,131.29 | 52,803,781.32 | |
| II. Accumulated Depreciation and Amortization | ||||
| 1. Balance at the beginning of the year | 11,923,174.46 | 4,841,225.56 | 16,764,400.02 | |
| 2. Increase in the current period | 487,472.35 | 215,860.26 | 703,332.61 | |
| (1) Provision or amortization | 487,472.35 | 215,860.26 | 703,332.61 | |
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Closing balance | 12,410,646.81 | 5,057,085.82 | 17,467,732.63 | |
| III. Impairment Provision | ||||
| 1. Balance at the beginning of the year | ||||
| 2. Increase in the current period | ||||
| (1) Provision | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Closing balance | ||||
| IV. Book Value | ||||
| 1. Closing book value of the period | 18,732,003.22 | 16,604,045.47 | 35,336,048.69 | |
| 2. Opening book value | 19,219,475.57 | 16,819,905.73 | 36,039,381.30 |
(2) Investment real estate measured at fair value
□ Applicable √ Inapplicable
(3) Information on investment real estate that the certificate of title has not been issuedOther descriptionsThe Company does not have investment real estate that the certificate of title has not been issued asat June 30, 2020.
21. Fixed assets
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Property and equipment | 2,907,864,726.86 | 2,921,392,106.87 |
| Total | 2,907,864,726.86 | 2,921,392,106.87 |
(1) Information on fixed assets
Unit: RMB
| Item | Properties and buildings | Equipment | Office equipment | Motor vehicles | Production equipment | Total |
| I. Original Book Value: | ||||||
| 1. Balance at the beginning of the year | 1,055,604,437.13 | 2,958,625,080.21 | 47,464,949.76 | 15,446,847.51 | 69,259,291.88 | 4,146,400,606.49 |
| 2. Increase in the current period | 62,728,216.87 | 61,999,628.61 | 3,595,565.85 | 4,925,214.36 | 133,248,625.69 | |
| (1) Purchase | 1,996,379.48 | 3,125,754.53 | 3,355,458.90 | 8,477,592.91 | ||
| (2) Transfer from construction in progress | 62,728,216.87 | 60,003,249.13 | 469,811.32 | 1,569,755.46 | 124,771,032.78 | |
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | 5,566,303.63 | 41,244.25 | 48,290.60 | 5,655,838.48 | ||
| (1) Disposal or write-off | 5,566,303.63 | 41,244.25 | 48,290.60 | 5,655,838.48 | ||
| 4. Closing balance | 1,118,332,654.00 | 3,015,058,405.19 | 51,019,271.36 | 15,446,847.51 | 74,136,215.64 | 4,273,993,393.70 |
| II. Accumulated Depreciation | ||||||
| 1. Balance at the beginning of the year | 190,985,787.16 | 952,947,310.00 | 22,508,285.71 | 7,191,366.34 | 32,365,697.61 | 1,205,998,446.82 |
| 2. Increase in the current period | 19,601,479.88 | 116,269,551.92 | 3,160,138.15 | 354,018.96 | 4,877,712.71 | 144,262,901.62 |
| (1) Provision | 19,601,479.88 | 116,269,551.92 | 3,160,138.15 | 354,018.96 | 4,877,712.71 | 144,262,901.62 |
| 3. Decrease in the current period | 2,212,729.92 | 32,923.86 | 37,666.72 | 2,283,320.50 |
| (1) Disposal or write-off | 2,212,729.92 | 32,923.86 | 37,666.72 | 2,283,320.50 | ||
| 4. Closing balance | 210,587,267.04 | 1,067,004,132.00 | 25,635,500.00 | 7,545,385.30 | 37,205,743.60 | 1,347,978,027.94 |
| III. Impairment Provision | ||||||
| 1. Balance at the beginning of the year | 18,970,596.52 | 29,332.40 | 10,123.88 | 19,010,052.80 | ||
| 2. Increase in the current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in the current period | 847,749.02 | 1,541.00 | 10,123.88 | 859,413.90 | ||
| (1) Disposal or write-off | 847,749.02 | 1,541.00 | 10,123.88 | 859,413.90 | ||
| 4. Closing balance | 18,122,847.50 | 27,791.40 | 18,150,638.90 | |||
| IV. Book Value | ||||||
| 1. Closing book value of the period | 907,745,386.96 | 1,929,931,425.69 | 25,355,979.96 | 7,901,462.21 | 36,930,472.04 | 2,907,864,726.86 |
| 2. Opening book value | 864,618,649.97 | 1,986,707,173.69 | 24,927,331.65 | 8,255,481.17 | 36,883,470.39 | 2,921,392,106.87 |
(2) Information on temporarily idle fixed assets
Unit: RMB
| Item | Original book value | Accumulated depreciation | Impairment provision | Book value | Remarks |
| Equipment | 41,682,969.05 | 22,202,372.94 | 18,122,847.50 | 1,357,748.61 | |
| Office equipment | 263,607.34 | 234,345.94 | 27,791.40 | 1,470.00 | |
| Total | 41,946,576.39 | 22,436,718.88 | 18,150,638.90 | 1,359,218.61 |
(3) Fixed assets acquired through finance lease: None
(4) Fixed assets leased through operating lease: None
(5) Information on fixed assets that the certificate of title has not been issued
Unit: RMB
| Item | Book value | The reasons for the certificate of title have not been issued |
| Workshops, warehouses, and dormitories of Hubei C&S | 148,918,737.44 | Processing |
| Warehouses and workshops of Zhejiang C&S | 3,803,395.58 | Processing |
| Plants and warehouses of Tangshan Branch | 47,675,910.63 | Processing |
| Total | 200,398,043.65 |
Other descriptionsThere was no limitation on the ownership of fixed assets of the Company at the end of the reportingperiod.
(6) Disposal of fixed assets: None
22. Construction in process
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Construction work in progress | 22,256,470.46 | 55,734,236.91 |
| Total | 22,256,470.46 | 55,734,236.91 |
(1) Construction in progress
Unit: RMB
| Project | Balance at the end of the year | Balance at the beginning of the year | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Construction of Jiangmen C&S | 1,278,303.32 | 1,278,303.32 | 8,149,431.17 | 8,149,431.17 | ||
| Construction of Zhejiang C&S | 677,479.68 | 677,479.68 | 494,274.78 | 494,274.78 | ||
| Construction of Sichuan C&S | 2,862,634.98 | 2,862,634.98 | ||||
| Construction of Tangshan Branch | 301,278.46 | 301,278.46 | 35,260,100.44 | 35,260,100.44 | ||
| Hubei C&S Project | 12,342,010.34 | 12,342,010.34 | 5,219,006.80 | 5,219,006.80 | ||
| Construction of Yunfu C&S | 4,794,763.68 | 4,794,763.68 | 6,611,423.72 | 6,611,423.72 | ||
| Total | 22,256,470.46 | 22,256,470.46 | 55,734,236.91 | 55,734,236.91 | ||
(2) Changes in significant construction in progress of the current period
Unit: RMB
| Item name | Budget number | Balance at the beginning of the year | Increase in the current period | The amount of fixed assets transferred in the current period | Decrease in the current period | Balance at the end of the year | Proportion of the cumulative construction input in budget | Construction progress | Accumulative amount of interest capitalization | Including: The amount of interest capitalization in the current period | Interest capitalization rate in the current period | Source of fund |
| Construction of Jiangmen C&S | 16,162,871.14 | 8,149,431.17 | 7,856,300.54 | 14,727,428.39 | 1,278,303.32 | 99.03% | 99.03% | Others |
| Construction of Zhejiang C&S | 4,854,261.08 | 494,274.78 | 4,271,913.94 | 4,088,709.04 | 677,479.68 | 98.19% | 98.19% | Others | ||||
| Construction of Sichuan C&S | 13,523,732.54 | 0.00 | 13,142,549.99 | 10,279,915.01 | 2,862,634.98 | 97.18% | 97.18% | Others | ||||
| Construction of Tangshan Branch | 332,000,000.00 | 35,260,100.44 | 19,337,701.73 | 54,296,523.71 | 301,278.46 | 18.72% | 18.72% | Others | ||||
| Hubei C&S Project | 1,353,000,000.00 | 5,219,006.80 | 13,865,276.26 | 6,742,272.72 | 12,342,010.34 | 51.35% | 51.35% | Others | ||||
| Construction of Yunfu C&S | 80,750,000.00 | 6,611,423.72 | 32,819,523.87 | 34,636,183.91 | 4,794,763.68 | 49.78% | 49.78% | Others | ||||
| Total | 1,800,290,864.76 | 55,734,236.91 | 91,293,266.33 | 124,771,032.78 | 22,256,470.46 | -- | -- | -- |
(3) The construction-in-progress provision set aside in the current periodOther descriptionsThere was no recoverable amount of the construction in progress lower than the book value thatrequired provisions in the Company in the current reporting period.
(4) Construction materials: None
23. Productive biological assets
(1) Productive biological assets measured at cost
□ Applicable √ Inapplicable
(2) Productive biological assets measured at fair value
□ Applicable √ Inapplicable
24. Oil & gas assets
□ Applicable √ Inapplicable
25. Right-of-use assets: None
26. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Land use rights | Patent right | Non-patented technology | Application software | Trademark right | Total |
| I. Original Book Value | ||||||
| 1. Balance at the beginning of the year | 189,064,322.15 | 1,342,721.84 | 12,433,710.50 | 168,370.83 | 203,009,125.32 | |
| 2. Increase in the current period | 1,783,304.46 | 1,783,304.46 | ||||
| (1) Purchase | 1,783,304.46 | 1,783,304.46 | ||||
| (2) Internal R&D | ||||||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | 189,064,322.15 | 1,342,721.84 | 14,217,014.96 | 168,370.83 | 204,792,429.78 |
| II. Accumulated Amortization | ||||||
| 1. Balance at the beginning of the year | 26,533,474.35 | 790,967.09 | 6,784,531.22 | 168,370.83 | 34,277,343.49 | |
| 2. Increase in the current period | 1,871,053.88 | 47,134.98 | 983,188.50 | 2,901,377.36 | ||
| (1) Provision | 1,871,053.88 | 47,134.98 | 983,188.50 | 0.00 | 2,901,377.36 | |
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | 28,404,528.23 | 838,102.07 | 7,767,719.72 | 168,370.83 | 37,178,720.85 | |
| III. Impairment Provision | ||||||
| 1. Balance at the beginning of the year | ||||||
| 2. Increase in the current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | ||||||
| IV. Book Value | ||||||
| 1. Closing book value of the period | 160,659,793.92 | 504,619.77 | 6,449,295.24 | 167,613,708.93 | ||
| 2. Opening book value | 162,530,847.80 | 551,754.75 | 5,649,179.28 | 168,731,781.83 |
The intangible assets generated by internal R&D of the Company at the end of the period occupies
0.00% of the balance of intangible assets.
(2) Information on the land use rights that the certificate of title has not been issued: None
27. Development expenses: None
28. Goodwill
(1) Original book value of the goodwill
Unit: RMB
| Name of investee or the matters forming goodwill | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year | ||
| Formed by business combination | Disposal | |||||
| Zhongshan Jie Rou Paper not under common control | 64,654.15 | 64,654.15 | ||||
| Total | 64,654.15 | 64,654.15 | ||||
(2) Provision for Impairment of goodwill
Relevant information on the asset groups or asset group portfolio in which the goodwill is locatedExplain the method to confirm the process of goodwill impairment test, key parameters (e.g. Thegrowth rate in the predictive period when predicting the present value of future cash flow, the
growth rate in the stable period, profit rate, discount rate, and predictive period), and the goodwillimpairment loss:
After conducting the asset impairment test by combining the goodwill with corresponding assetgroups, there was no impairment as at June 30, 2020, and provisions at the end of the reportingperiod were not set aside.Influence of the goodwill impairment testOther descriptions
29. Long-term unamortized expenses
Unit: RMB
| Item | Balance at the beginning of the year | Increase in the current period | Amortized amount of current period | Decrease | Balance at the end of the year |
| Use rights of sewage discharge | 3,763,858.78 | 727,629.84 | 3,036,228.94 | ||
| Property management fees of the office building | 8,942,538.46 | 6,306,257.46 | 2,367,428.95 | 12,881,366.97 | |
| Electricity use rights | 980,000.00 | 105,000.00 | 875,000.00 | ||
| Total | 13,686,397.24 | 6,306,257.46 | 3,200,058.79 | 16,792,595.91 |
Other descriptionsNone
30. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that were not offset
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Allowance for impairment losses | 34,779,547.97 | 7,720,181.43 | 33,522,565.26 | 7,354,388.34 |
| Unrealized profit in internal transaction | 38,283,258.01 | 7,614,837.29 | 32,400,998.88 | 6,052,001.45 |
| Deductible loss | 103,971,403.92 | 25,992,850.98 | 133,306,241.56 | 33,326,560.39 |
| Accrued expenses | 49,082,779.64 | 12,270,694.91 | 49,082,779.64 | 12,270,694.91 |
| Employee remuneration unpaid | ||||
| Provisions for impairment of fixed assets | 18,150,638.90 | 3,319,714.34 | 19,010,052.80 | 3,472,180.20 |
| Provision for impairment of inventories | 3,396,382.79 | 663,918.93 | 2,762,390.34 | 535,522.47 |
| Equity incentive cost | 205,234,822.09 | 49,130,795.61 | 73,883,673.67 | 17,319,732.41 |
| Total | 452,898,833.32 | 106,712,993.49 | 343,968,702.15 | 80,331,080.17 |
(2) Deferred income tax liabilities that were not offset
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Pre-tax deduction of PP&E at one time as stipulated in the tax law | 198,776,645.09 | 37,539,267.58 | 152,874,671.45 | 30,016,107.43 |
| Total | 198,776,645.09 | 37,539,267.58 | 152,874,671.45 | 30,016,107.43 |
(3) Deferred income tax assets or liabilities presented with the net amount after offset
Unit: RMB
| Item | The offset amount of the deferred income tax assets and liabilities at the end of the reporting period | The balance of the deferred income tax assets or liabilities after offset at the end of the reporting period | The offset amount of the deferred income tax assets and liabilities at the beginning of the reporting period | The balance of the deferred income tax assets or liabilities after offset at the beginning of the reporting period |
| Deferred income tax assets | 106,712,993.49 | 80,331,080.17 | ||
| Deferred income tax liabilities | 37,539,267.58 | 30,016,107.43 |
(4) Breakdown of the unconfirmed deferred income tax assets
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Deductible temporary differences | 123,638.38 | 84,331.04 |
| Total | 123,638.38 | 84,331.04 |
(5) Deductible loss of the unconfirmed deferred income tax assets will be due in the next year:
None
31. Other non-current assets
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Prepaid accounts of software | 4,084,912.11 | 4,084,912.11 | 3,326,948.93 | 3,326,948.93 | ||
| Prepaid accounts of engineering equipment | 32,602,221.58 | 32,602,221.58 | 2,979,080.03 | 2,979,080.03 | ||
| Total | 36,687,133.69 | 36,687,133.69 | 6,306,028.96 | 6,306,028.96 | ||
Other explanation: None
32. Short-term borrowings
(1) Category of short-term borrowings
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Guaranteed borrowings | 161,860,368.50 | 14,721,492.38 |
| Total | 161,860,368.50 | 14,721,492.38 |
Description of the category of short-term borrowings: None
(2) Short-term borrowings overdue but unpaid: None
There were no short-term borrowings overdue but unpaid in the Company at the end of thereporting period.
33. Tradable financial liabilities: None
34. Derivative financial liabilities: None
35. Notes payable
Unit: RMB
| Category | Balance at the end of the year | Balance at the beginning of the year |
| Banker's acceptance | 204,505,448.05 | 202,653,860.31 |
| Total | 204,505,448.05 | 202,653,860.31 |
The total amount of the notes payable due but unpaid at the end of the reporting period is RMB0.00.
36. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Accounts payable | 586,807,107.68 | 578,212,781.22 |
| Total | 586,807,107.68 | 578,212,781.22 |
(2) Important accounts payable exceeding one year
Unit: RMB
| Item | Balance at the end of the year | Reason for unsettlement or not carry-over |
| 1st | 6,260,046.15 | The contract settlement conditions |
| were not met | ||
| Total | 6,260,046.15 | -- |
Other explanation: None
37. Payments received in advance
(1) List of payments received in advance: None
(2) Important payments received in advance exceeding one year
Other explanations:
There were no payments received in advance exceeding one year in the balance of the Company atthe end of the reporting period.
38. Contract liabilities
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Advances on sales | 79,981,886.78 | 142,476,562.31 |
| Total | 79,981,886.78 | 142,476,562.31 |
39. Employee remuneration payable
(1) List of employee remuneration payable
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| I. Short-term Compensation | 106,224,592.83 | 320,003,162.18 | 334,022,866.76 | 92,204,888.25 |
| II. Post-employment Benefits - Defined Contribution Plan | 189,007.44 | 7,184,542.44 | 7,314,419.27 | 59,130.61 |
| III. Dismissal Benefits | 453,642.38 | 453,642.38 | ||
| Total | 106,413,600.27 | 327,641,347.00 | 341,790,928.41 | 92,264,018.86 |
(2) List of short-term remuneration
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| 1. Salary, bonus and subsidy | 105,632,187.56 | 294,152,847.35 | 309,532,480.75 | 90,252,554.16 |
| 2. Employee welfare | 11,073,608.15 | 10,276,861.76 | 796,746.39 | |
| 3. Social insurance premiums | 138,180.30 | 6,694,755.47 | 6,672,043.29 | 160,892.48 |
| Including: Medical insurance | 123,961.21 | 5,655,698.30 | 5,623,823.24 | 155,836.27 |
| Employment injury insurance | 7,474.96 | 283,553.45 | 290,852.30 | 176.11 |
| Maternity | 6,744.13 | 755,503.72 | 757,367.75 | 4,880.10 |
| insurance | ||||
| 4. Housing fund | 235,586.00 | 6,560,208.26 | 6,158,619.12 | 637,175.14 |
| 5. Labor union fee and staff education fee | 218,638.97 | 1,521,742.95 | 1,382,861.84 | 357,520.08 |
| Total | 106,224,592.83 | 320,003,162.18 | 334,022,866.76 | 92,204,888.25 |
(3) List of defined contribution plans
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| 1. Basic endowment insurance | 182,767.82 | 6,957,144.82 | 7,081,396.47 | 58,516.17 |
| 2. Unemployment insurance | 6,239.62 | 227,397.62 | 233,022.80 | 614.44 |
| Total | 189,007.44 | 7,184,542.44 | 7,314,419.27 | 59,130.61 |
Other explanations:
There was no delinquency of employee remuneration payable in the Company at the end of thereporting period.
40. Tax and fees payable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Value-added tax | 22,304,709.86 | 40,202,978.00 |
| Corporate income tax | 69,887,770.68 | 53,355,863.46 |
| Individual income tax | 1,193,456.54 | 1,419,250.54 |
| City construction and maintenance tax | 1,487,174.33 | 1,943,704.81 |
| Education surcharges | 710,553.71 | 998,926.69 |
| Property tax | 3,541,802.02 | 1,074,531.92 |
| Stamp tax | 560,403.47 | 561,017.55 |
| Land use tax | 771,971.10 | 796,430.83 |
| Local education surcharges | 473,702.47 | 665,951.12 |
| Disabled security fund | 604,121.54 | 364,478.02 |
| Resources tax | 59,938.40 | 69,070.60 |
| Environmental protection tax | 111,856.66 | 218,414.57 |
| Total | 101,707,460.78 | 101,670,618.11 |
Other explanation: None
41. Other payables
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Interest payable | 41,625.00 | 173,259.89 |
| Dividends payable | 1,510,753.80 | 452,536.50 |
| Other payables | 711,270,057.51 | 635,208,714.66 |
| Total | 712,822,436.31 | 635,834,511.05 |
(1) Interest payable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Interest of long-term borrowings with interest repayment by installment and principal repayment upon maturity | 85,143.46 | |
| Interest payable of short-term borrowings | 41,625.00 | 88,116.43 |
| Total | 41,625.00 | 173,259.89 |
Important interest overdue but unpaid: None
(2) Dividends payable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Dividends for restricted shares | 1,510,753.80 | 452,536.50 |
| Total | 1,510,753.80 | 452,536.50 |
Other descriptions including important dividends payable exceeding one year, and the reasons fornon-payment that should be disclosed: None
(3) Other payables
(1) Other payables listed based on amount nature
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Deposits and margins | 21,458,020.28 | 15,743,185.19 |
| Unpaid fees | 611,140,212.63 | 502,706,478.59 |
| Others | 2,582,155.15 | 2,612,148.46 |
| The repurchase obligation of restricted shares | 76,038,959.88 | 104,792,649.00 |
| Authorized collection and payment of individual income tax under the equity incentive | 50,709.57 | 9,354,253.42 |
| Total | 711,270,057.51 | 635,208,714.66 |
2) Other important accounts payable exceeding one year
Unit: RMB
| Item | Balance at the end of the year | Reason for unsettlement or not carry-over |
| 1st | 6,323,465.21 | Not yet settled |
| Total | 6,323,465.21 | -- |
Other explanation: None
42. Liabilities held for sale: None
43. Non-current liabilities due within one year
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Long-term borrowings due within one year | 32,400,000.00 | |
| Total | 32,400,000.00 |
Other explanation: None
44. Other current liabilities: None
45. Long-term borrowings
(1) Category of long-term borrowings
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Guaranteed borrowings | 22,500,000.00 | |
| Total | 22,500,000.00 |
Description of the category of long-term borrowings: NoneOther descriptions including the interval of interest rate: None
46. Bonds payable
(1) Bonds payable: None
(2) Changes in the increase and decrease of the bonds payable (excluding other financialinstruments such as preference shares and perpetual bonds that are divided into financialliabilities): None
(3) Descriptions of the conditions for converting bonds and converting time of convertiblebonds: None
(4) Descriptions of other financial instruments that are divided into financial liabilitiesBasic information on other financial instruments in issue at the end of the reporting period, such asthe preference shares and perpetual bonds: NoneTable of changes in other financial instruments in issue at the end of the reporting period, such asthe preference shares and perpetual bonds: NoneDescriptions of the basis for other financial instruments to be divided into financial liabilities: NoneOther explanation: None
47. Lease liabilities: None
48. Long-term payables: None
(1) Long-term payables listed based on amount nature: None
(2) Special payables: None
49. Long-term employee remuneration payable
(1) Table of long-term employee remuneration payable: None
(2) Changes of the defined benefit plan: None
50. Projected liabilities: None
51. Deferred income
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year | Reasons for formation |
| Government grants | 82,367,831.33 | 24,880,000.00 | 4,272,824.50 | 102,975,006.83 | Government grants related to assets |
| Total | 82,367,831.33 | 24,880,000.00 | 4,272,824.50 | 102,975,006.83 | -- |
Projects involving government grants:
Unit: RMB
| Liabilities | Balance at the beginning of the year | Increased amount of subsidies in the current period | The amount included in non-operating revenue in the current period | The amount included in other income in the current period | The amount of offset costs in the current period | Other changes | Balance at the end of the year | Related to assets/income |
| Financial support fund for the expansion project of 25,000 tons of high grade household paper | 8,078,701.55 | 312,723.90 | 7,765,977.65 | Related to assets | ||||
| Subsidies for the infrastructure construction of new factory in Hubei | 31,607,370.32 | 535,718.16 | 31,071,652.16 | Related to assets | ||||
| The ex-post funds awarded to the first batch of the | 4,716,165.98 | 317,293.32 | 4,398,872.66 | Related to assets |
| union enterprises for the technical transformation in 2017 | ||||||||
| Support funds for the construction of environmental protection facilities | 3,351,587.39 | 159,523.80 | 3,192,063.59 | Related to assets | ||||
| Special funds for the capacity expansion project of 25,000 tons | 2,395,833.26 | 287,500.02 | 2,108,333.24 | Related to assets | ||||
| Discount interest funds for imported equipment | 2,633,468.75 | 96,937.50 | 2,536,531.25 | Related to assets | ||||
| Support funds for the construction of Automated Storage & Retrieval System | 2,162,500.00 | 20,000,000.00 | 192,647.06 | 21,969,852.94 | Related to assets | |||
| Subsidies for the production expansion project of 25,000 tons of high grade household paper | 2,066,666.79 | 79,999.98 | 1,986,666.81 | Related to assets | ||||
| Subsidies for "water treatment" project construction | 1,524,940.00 | 77,539.32 | 1,447,400.68 | Related to assets | ||||
| Support funds for sewage centralized water treatment project | 1,093,500.00 | 60,750.00 | 1,032,750.00 | Related to assets | ||||
| Support funds for the technical transformation of equipment production line | 4,447,359.44 | 403,311.72 | 4,044,047.72 | Related to assets | ||||
| Support funds for equipment of Phase II project | 11,438,819.16 | 985,624.08 | 10,453,195.08 | Related to assets | ||||
| Support funds for the transformation of Phase I | 3,708,873.26 | 224,780.22 | 3,484,093.04 | Related to assets |
| project | ||||||||
| Subsidies for sewage treatment station | 3,142,045.43 | 238,636.38 | 2,903,409.05 | Related to assets | ||||
| Funds for technical transformation of the production line | 3,880,000.00 | 264,124.76 | 3,615,875.24 | Related to assets | ||||
| Funds for traditional enterprise transformation projects | 1,000,000.00 | 35,714.28 | 964,285.72 | Related to assets | ||||
| Total | 82,367,831.33 | 24,880,000.00 | 4,272,824.50 | 102,975,006.83 |
Other explanation: None
52. Other non-current liabilities: None
53. Share capital
Unit: RMB
| Balance at the beginning of the year | Increase and decrease of this change (+ and -) | Balance at the end of the year | |||||
| Issuance of additional shares | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | |||
| Total number of shares | 1,308,891,273.00 | 2,591,508.00 | -802,722.00 | 1,788,786.00 | 1,310,680,059.00 | ||
Other explanations:
Please refer to "Section XI III. Basic Information of the Company 1. Development history of thecompany" for details about the changes in the share capital of the Company in the reporting period.
54. Other equity instruments
(1) Basic information on other financial instruments in issue at the end of the reporting period,such as the preference shares and perpetual bonds: None
(2) Table of changes in other financial instruments in issue at the end of the reporting period,such as the preference shares and perpetual bondsDescriptions of changes and the reasons for changes of other equity instruments in the currentperiod, and the basis for relevant accounting processing: NoneOther explanation: None
55. Capital reserve
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| Capital premium (share premium) | 595,936,687.24 | 22,940,029.30 | 2,673,064.26 | 616,203,652.28 |
| Other capital reserve | 164,794,729.33 | 80,671,237.42 | 3,317,130.24 | 242,148,836.51 |
| Total | 760,731,416.57 | 103,611,266.72 | 5,990,194.50 | 858,352,488.79 |
Other descriptions, including changes of increase and decrease, and the reasons for changes in thecurrent period:
(1) The Company held the 23rd meeting of the fourth Board of Directors and the19th meeting of thefourth Board of Supervisors, and approved the Proposal on the Achievement of Exercise Conditionsof the First Exercise Period of Stock Option for the First Time under the Company's 2018 StockOption and Restricted Stock Incentive Plan. In conformity with the regulations of the 2018 StockOption and Restricted Stock Incentive Plan (Draft), the Board of Directors considered that theexercise conditions in the first exercise period of the equity options granted for the first time hadbeen met. There were 2,522 incentive recipients that met the exercise conditions, the number offeasible equity options was 3,431,505, and the exercise price was RMB8.572 per share. The capitalreserve - share premium of option exercise in the reporting period was increased byRMB22,940,029.30. The Company held the 23rd meeting of the fourth Board of Directors,approved the Proposal on the Repurchase and Deregistration of Partial Restricted Stock for theFirst Time under the Company's 2018 Stock Option and Restricted Stock Incentive Plan. Besides,the Company convened the second extraordinary general meeting of Shareholders in 2020,approved the Proposal on Reducing the Company's Registered Capital and Revising the Articles ofAssociation. When the Phase I of restricted stock granted for the first time under the Company's2018 Stock Option and Restricted Stock Incentive Plan was unlocked, 241 incentive recipients lostincentive qualification due to their dismission before unlocking, unqualified personal assessment,and failure to get the full mark though qualified in the personal assessment, and they agreed torepurchase and write off a total of 802,722 granted but not unlocked restricted stocks, and reducedRMB2,673,064.26 of share reserve - share premium at the meantime.
(2) In accordance with relevant policies for stock payment, the cost in the reporting period was setaside and RMB50,297,192.75 was included in "capital reserve - other capital reserve". In terms ofthe future deductible amount before tax of the unlocked portion of the Company's stock incentiveplan exceeding the book recognition expense, the deferred income tax assets were confirmed andRMB30,374,044.67 was included in the capital reserve. The capital reserve - other capital reserve ofoption exercise in the reporting period was decreased by RMB3,317,130.24.
56. Treasury shares
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| Restricted shares | 104,792,649.00 | 28,307,544.47 | 29,380,369.51 | 103,719,823.96 |
| Total | 104,792,649.00 | 28,307,544.47 | 29,380,369.51 | 103,719,823.96 |
Other descriptions, including changes of increase and decrease, and the reasons for changes in thecurrent period:
(1) The Company implemented the repurchase of shares by centralized bidding transactions through
repurchase special securities accounts. The number of shares repurchased was 1,895,900accumulatively, accounting for 0.1448% of the Company's total share capital. The highesttransaction amount was RMB15 per share, the lowest one was RMB14.34 per share, the totaltransaction amount was RMB27,680,721.76, and the treasury stocks increased byRMB27,680,721.76.
(2) The cancellation of RMB78,666.82 of cash dividends originally held by the targets of therepurchase and deregistration was included in the increase of the current period; RMB548,155.89 ofunlocked cash dividends in the first period is included in the increase of the current period.
(3) Under the policy related to share-based payments, 5,593,428 shares of restricted stocks wereunlocked at RMB4.33 per share during the reporting period, a decrease of RMB24,219,543.24 intreasury shares.
(4) When the first phase of the first grant of restricted stock was unlocked, 241 incentive subjectsleft the Company before the unlocking to lose their incentive qualifications, failed to meet thestandard in personal assessment, and met the personal assessment but less than a full score, agreedto repurchase and cancel a total of 802,722 shares of restricted stock that had been granted but notunlocked. Among them, 35 incentive recipients left the Company before unlocking and weredisqualified, and 705,000 restricted shares were granted but not unlocked. One incentive recipientfailed to meet the personal assessment, and 6,000 restricted shares were not unlocked. 205 incentivesubjects met the personal assessment but did not score full marks. They unlocked sharesproportionally based on their scores, and 91,722 restricted shares were not unlocked. Each sharevalued RMB4.33, and a decrease of RMB3,475,786,26 occurred in treasury shares.
(5) Cash dividends paid to restricted stockholders within the waiting period were revocable. Forrestricted stockholders who are expected to unlock their shares in the future, the distribution of cashdividends during the reporting period reduced treasury shares by RMB1,685,040.01.
57. Other comprehensive income: None
58. Special reserves: None
59. Surplus reserve
Unit: RMB
| Item | Balance at the beginning of the year | Increase of current period | Decrease in the current period | Balance at the end of the year |
| Legal surplus reserves | 53,205,582.86 | 53,205,582.86 | ||
| Total | 53,205,582.86 | 53,205,582.86 |
Explanation of surplus reserves, including changes and the reasons for changes during the period:
None
60. Retained profit
Unit: RMB
| Item | Current period | Previous period |
| Undistributed profits before adjustment at the end of the last period | 2,058,968,835.80 | 1,490,758,189.02 |
| Undistributed profits at the beginning of the period after adjustment | 2,058,968,835.80 | 1,490,758,189.02 |
| Plus: Net profit attributable to owners of the parent company of the current period | 452,699,484.61 | 274,874,634.43 |
| Dividends on ordinary shares payable | 97,945,986.16 | 29,721,104.20 |
| Undistributed profits at the end of the period | 2,413,722,334.25 | 1,735,911,719.25 |
Details of undistributed profits at the beginning of the period after adjustment:
(1) As a result of retrospective adjustments to the Accounting Standards for Business Enterprisesand its related new provisions, the impact on undistributed profits at the beginning of the period wasRMB0.00.
(2) Due to the changes in accounting policies, the impact on undistributed profits at the beginningof the period was RMB0.00.
(3) Due to the correction of material accounting errors, the impact on undistributed profits at thebeginning of the period was RMB0.00.
(4) Due to the changes in the scope of combination caused by the same control, the impact onundistributed profits at the beginning of the period was RMB0.00.
(5) Other adjustments affected undistributed profits at the beginning of the period by a total ofRMB0.00.
61. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 3,600,704,841.94 | 1,918,216,266.98 | 3,117,772,177.10 | 1,957,532,407.94 |
| Others | 15,496,557.86 | 13,190,651.18 | 54,616,849.86 | 50,803,823.08 |
| Total | 3,616,201,399.80 | 1,931,406,918.16 | 3,172,389,026.96 | 2,008,336,231.02 |
Relevant information of income: NoneRelevant information of performance obligation: NoneRelevant information of the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executedcontract that is not performed or fully performed at the end of the reporting period isRMB13,382,716.97, of which the income of RMB13,382,716.97 is expected to be confirmed in theyear of 2020.Other explanation: None
62. Tax and surcharges
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| City construction and maintenance tax | 9,361,201.41 | 5,017,119.18 |
| Education surcharges | 4,706,053.57 | 2,808,844.72 |
| Property tax | 4,767,707.05 | 3,917,690.87 |
| Land use tax | 1,746,360.26 | 1,469,916.00 |
| Vehicle and vessel use tax | 12,360.00 | 10,335.00 |
| Stamp tax | 3,007,283.02 | 2,567,993.11 |
| Environmental protection tax | 181,672.99 | 122,147.76 |
| Local education surcharges | 3,137,369.06 | 1,867,843.13 |
| Total | 26,920,007.36 | 17,781,889.77 |
Other explanation: None
63. Sales costs
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 134,986,732.37 | 114,615,949.89 |
| Advertising and promotion expenses | 74,270,803.62 | 63,937,933.85 |
| Product promotion fees | 411,196,541.39 | 243,505,631.59 |
| Shopping mall management fees | 48,753,624.04 | 35,493,967.64 |
| Transportation expenses | 165,690,045.64 | 135,914,356.58 |
| Traveling expenses | 4,940,998.20 | 6,654,290.85 |
| Business entertainment expenses | 436,080.12 | 724,640.09 |
| Rental fee | 3,183,544.55 | 3,278,028.80 |
| Others | 4,612,712.67 | 3,644,482.20 |
| Total | 848,071,082.60 | 607,769,281.49 |
Other explanation: None
64. Administrative expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 70,379,157.38 | 56,321,695.78 |
| Office allowance | 10,475,476.21 | 7,182,089.19 |
| Taxes and fees | 321,431.07 | 277,958.56 |
| Depreciation and amortization fees | 31,544,768.00 | 20,500,741.11 |
| Rental fee | 1,475,930.22 | 598,340.41 |
| Traveling expenses | 393,381.65 | 1,433,480.02 |
| Business entertainment expenses | 1,580,927.02 | 1,643,377.69 |
| Consulting service fees | 4,773,171.55 | 4,100,346.82 |
| Environmental protection fees | 1,251,298.69 | 1,011,018.14 |
| Outsourcing warehouse management fees | 5,349,303.92 | 5,341,198.77 |
| Equity incentive cost | 52,983,211.08 | 24,554,780.00 |
| Others | 5,173,797.22 | 3,822,623.73 |
| Total | 185,701,854.01 | 126,787,650.22 |
Other explanation: None
65. R&D expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 17,174,899.12 | 11,550,920.19 |
| Direct investment | 59,534,214.24 | 43,435,750.19 |
| Depreciation and amortization fees | 12,202,630.08 | 7,315,645.93 |
| Others | 1,949,084.80 | 1,738,338.56 |
| Total | 90,860,828.24 | 64,040,654.87 |
Other explanation: None
66. Financial expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Interest fees | 1,140,788.29 | 8,797,536.95 |
| Less: interest income | 4,060,998.02 | 1,693,449.28 |
| Exchange profit and loss | -993,705.23 | 4,216,398.11 |
| Plus: Transaction fee and others | 2,891,912.73 | 3,503,937.63 |
| Total | -1,022,002.23 | 14,824,423.41 |
Other explanation: None
67. Other income
Unit: RMB
| Sources of the return on other income | Incurred in the current period | Incurred in the prior period |
| Financial support funds for industry collaboration | 7,892,985.55 | 1,677,400.00 |
| The reward of 2018 support policy of Economic and Information Technology Bureau of Pengzhou | 1,310,000.00 | |
| Support funds for equipment of Phase II project | 985,624.08 | |
| Refund of individual income tax | 696,845.15 | |
| Infrastructure construction subsidies of the new factory of Hubei C&S | 535,718.16 | |
| VAT exemption for retired soldiers and employment of the poor population | 438,350.00 | |
| Support funds for equipment and technology upgrading | 403,311.72 | |
| The ex-post funds awarded to the first batch of the union enterprises for the technical transformation in 2017 | 317,293.32 | 367,470.56 |
| Partial 2013-2017 financial support funds of Management Committee of Sichuan Province Pengzhou Industrial Development Zone | 312,723.90 | 312,723.90 |
| Award for breakthroughs with increases in businesses | 300,000.00 | |
| The 25,000 tons capacity expansion project of Tangshan Branch | 287,500.02 | 287,500.02 |
| Provincial support funds for enterprise technical upgrading | 264,124.76 | |
| Financial support for the sewage treatment station project of Tangshan Branch | 238,636.38 | 119,318.19 |
| Support funds for the transformation of Phase I project | 224,780.22 | |
| Subsidies for photovoltaic power rooftop | 224,640.00 | |
| Support funds for the construction of Automated Storage & Retrieval System | 192,647.06 | 75,000.00 |
| Support funds for the construction of environmental protection facilities | 159,523.80 | 159,523.80 |
| Import interest discounts on imported equipment in 2014 | 96,937.50 | 96,937.50 |
| Increase of special assets management plans of subsidies for 25,000 tons household paper | 79,999.98 | 79,999.98 |
| Subsidies for water treatment project | 77,539.32 | 77,539.32 |
| Financial support for sewage centralized water treatment project | 60,750.00 | 60,750.00 |
| Provincial funds for traditional industry transformation projects | 35,714.28 | |
| 2019 energy efficiency special fund of Bureau of Science, Industry and Commerce (enterprises with clean production) | 20,000.00 | |
| 2018 management system certification rewards of Pengzhou Municipal Administration for Market Regulation | 10,000.00 | |
| Subsidies for pandemic prevention system building of enterprises of Economic and Information Technology Bureau of Pengzhou | 9,000.00 | |
| Subsidy funds for high-tech enterprise evaluation and certification (cultivation) | 800,000.00 | |
| Technical transformation funds of Financial Department, Shuangshui Town, Xinhui District, Jiangmen City | 392,857.14 | |
| Subsidy funds for applications of high-tech enterprises | 50,000.00 | |
| Total | 15,174,645.20 | 4,557,020.41 |
68. Income on investment
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Others | 2,287,274.87 | 72,378.41 |
| Total | 2,287,274.87 | 72,378.41 |
Other explanations:
"Others" are returns on principal-protected wealth management products at maturity and reverse repoof treasury bonds of the Company
69. Profit of net exposure hedging: None
70. Income from changes in fair value: None
71. Credit impairment losses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Bad debt losses from other receivables | -1,502,718.88 | -252,972.40 |
| Impairment loss on accounts receivable | 79,019.13 | 1,282,474.48 |
| Total | -1,423,699.75 | 1,029,502.08 |
Other explanation: None
72. Asset impairment loss
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| II. Impairment Loss of Inventories and Contract Performance Cost | -850,381.40 | -589,537.49 |
| V. Impairment Losses of Fixed Assets | -1,932,871.50 | |
| Total | -850,381.40 | -2,522,408.99 |
Other explanation: None
73. Return on disposal of assets
Unit: RMB
| Sources of the return on disposal of assets | Incurred in the current period | Incurred in the prior period |
| Return on disposal of PP&E | -896,870.05 | -389,173.07 |
| Total | -896,870.05 | -389,173.07 |
74. Non-operating revenue
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | Amount recognized as profit or loss for the current period |
| Government grants | 1,997,067.57 | 1,651,393.00 | 1,997,067.57 |
| Income from fine and compensation | 640,155.42 | 588,849.92 | 640,155.42 |
| Others | 530,259.96 | 495,506.30 | 530,259.96 |
| Profit from damage and retirement of non-current assets | 1,758.21 | 1,758.21 | |
| Including: Fixed assets | 1,758.21 | 1,758.21 | |
| Total | 3,169,241.16 | 2,735,749.22 | 3,169,241.16 |
Government grants recognized as profit or loss for the current period:
Unit: RMB
| Grants | Issuer | Reason | Nature and type | The subsidy affected the profit and loss for the year or not | Special subsidy or not | Amount incurred in the current period | Amount incurred in the last period | Related to assets/income |
| Support funds of Management Committee of Development Zone | Management Committee of Pengzhou City Industrial Development Zone | Grants | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 1,295,600.00 | Related to income | |
| Subsidies for stable employment | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 291,200.00 | 135,000.00 | Related to income |
| The reward of 2017 government support of Economic and Information Technology Bureau of Pengzhou | Economic Technology and Investment Promotion Bureau of Pengzhou | Rewards | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 100,000.00 | Related to income | |
| Subsidies for enterprise social insurance | Human Resources and Social Security Department of Hubei Province | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 44,000.00 | Related to income | |
| Special funds for promoting the stable growth of foreign trade | Zhongshan Bureau of Commerce | Rewards | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 41,093.00 | Related to income | |
| Subsidies for stable employment | Labor and Employment Administration of | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control | No | No | 27,200.00 | 32,200.00 | Related to income |
| Xiaonan District, Xiaogan City | of a public utility or socially necessary product | |||||||
| Reward subsidy of the Labour and Employment Administration for the employment of poor people in enterprises | Human Resources and Social Security Bureau of Xiaonan District, Xiaogan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 2 000,00 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Human Resources and Social Security Bureau of Luoding City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 1,500.00 | Related to income | |
| Subsidies for enterprise social insurance | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 37,332.00 | Related to income | |
| Special award funds for the restructuring of industrial enterprises | Treasury Centralized Receipt and Payment Center of Xiaonan District, Xiaogan City | Rewards | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 410,000.00 | Related to income | |
| Subsidies for stable employment | Employment Services Management Bureau of Pengzhou City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 29,142.57 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Employment Service Center of Hangzhou City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 887.00 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Employment Management Service Department of Pinghu City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 389,857.30 | Related to income | |
| Subsidies for stable | Social Insurance | Grants | Subsidies received for the | No | No | 245,515.30 | Related to |
| employment | Career Management Bureau of Chengdu City | performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | income | |||||
| One-time employment intake subsidy | Human Resources and Social Security Bureau of Luoding City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 238,317.87 | Related to income | |
| Subsidies for stable employment | Social Insurance Career Bureau of Yutian County | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 87,935.77 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Human Resources and Social Security Bureau of Yunfu City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 72,684.00 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Social Insurance Fund Management Bureau of Zhongshan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 50,801.57 | Related to income | |
| Subsidies for employees of enterprises with the resumption of work and production | Dongsheng Branch of Human Resources and Social Security Bureau of Zhongshan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 40,400.00 | Related to income | |
| Subsidies of enterprise training for Xiaogan No. 4 Technical School | Xiaogan No. 4 Technical School | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 33,000.00 | Related to income | |
| Grants for pandemic prevention | Financial Payment (Accounting) Center of Jiaxing Port Area | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 19,750.00 | Related to income |
| Unemployment insurance and employment stabilization subsidies | Social Insurance Fund Management Bureau of Yunfu City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 16,343.00 | Related to income | |
| Security social service | Management Committee of Development and Construction of Jiaxing Port Area | Grants | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 5,000.00 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Human Resources and Social Security Bureau of Luoding City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 1,500.00 | Related to income | |
| Unemployment insurance and employment stabilization subsidies | Dongsheng Branch of Human Resources and Social Security Bureau of Zhongshan City | Grants | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 118.16 | Related to income | |
| Funds of promotion of enterprise development | Yunfu Municipal Finance Bureau | Grants | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 83.03 | Related to income | |
| Total | 1,997,067.57 | 1,651,393.00 |
Other explanation: None
75. Non-operating expense
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | Amount recognized as profit or loss for the current period |
| External donations | 11,952,705.59 | 91,000.00 | 11,952,705.59 |
| Others | 1,267,171.07 | 269,904.63 | 1,267,171.07 |
| Loss from the damage and abandonment of non-current assets | 20,306.50 | 50,463.95 | 20,306.50 |
| Including: Fixed assets | 20,306.50 | 50,463.95 | 20,306.50 |
| Intangible assets | |||
| Total | 13,240,183.16 | 411,368.58 | 13,240,183.16 |
Other explanation: None
76. Income tax expenses
(1) Table of income tax expense
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Current income tax expense | 76,953,980.75 | 55,947,416.55 |
| Deferred income tax expense | 8,829,273.17 | 7,098,544.68 |
| Total | 85,783,253.92 | 63,045,961.23 |
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
| Item | Incurred in the current period |
| Total profit | 538,482,738.53 |
| Income tax expenses calculated at the statutory/applicable tax rate | 134,620,684.63 |
| Impacts of different tax rates applied to subsidiaries | -45,835,743.68 |
| Impacts of adjustments to income taxes during the prior period | -10,592,048.77 |
| Impacts of non-deductible costs, expenses and losses | 7,590,361.74 |
| Income taxes | 85,783,253.92 |
Other explanation: None
77. Other comprehensive income
See the Notes for details.
78. Items in the cash flow statement
(1) Cash received related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Current accounts | 12,564,390.63 | 10,530,072.51 |
| Fiscal stimulus | 36,365,077.82 | 11,722,281.47 |
| Interest Income | 4,060,998.02 | 1,693,449.28 |
| Authorized collection of individual income tax under the equity incentive | 17,943,967.78 | 11,950,663.10 |
| Others | 6,055,212.85 | 4,951,827.99 |
| Total | 76,989,647.10 | 40,848,294.35 |
Explanation of cash received related to other operating activities: None
(2) Cash payments related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Expenses paid | 316,942,453.60 | 290,074,941.89 |
| Current accounts | 2,335,741.67 | 11,920,797.49 |
| Authorized payment of individual income tax under the equity incentive | 28,191,169.72 | 20,737,285.80 |
| Others | 10,981,895.83 | 42,132.22 |
| Total | 358,451,260.82 | 322,775,157.40 |
Explanation of cash paid related to other operating activities: None
(3) Cash received related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Principal repayment on maturity of WM products | 40,000,000.00 | |
| Principal repayment on maturity of treasury bonds reverse repurchase | 87,105,000.00 | |
| Total | 127,105,000.00 |
Explanation of cash received related to other investment activities: None
(4) Cash payments related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Purchasing WM products | 212,400,000.00 | |
| Total | 212,400,000.00 |
Explanation of cash paid related to other investment activities: None
(5) Cash received related to other financing activities
Explanation of cash received related to other financing activities: None
(6) Cash payments related to other financing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Incentive, repurchase and deregistration of equity | 3,475,786.26 | 460,054.74 |
| Share repurchase | 27,680,721.76 | |
| Deposits of bills, letter of guarantee and margin of letter of credit | 9,290,358.88 | 15,847,938.88 |
| Total | 40,446,866.90 | 16,307,993.62 |
Explanation of cash paid related to other financing activities: None
79. Supplementary information to cash flow statement
(1) Supplementary information to cash flow statement
Unit: RMB
| Supplementary Information | Amount of the current period | Amount of last period |
| 1. Reconciliation of net profit to cash flows from operating activities: | -- | -- |
| Net Profit | 452,699,484.61 | 274,874,634.43 |
| Plus: Provisions for asset impairment | 2,274,081.15 | 1,492,906.91 |
| The depreciation of PP&E, oil and gas assets and productive biological assets | 145,151,634.15 | 118,751,157.73 |
| Intangible asset amortization | 2,901,377.36 | 1,932,054.03 |
| Long-term unamortized expenses | 3,200,058.79 | 35,050.14 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets ("-" indicates income) | 896,870.05 | 389,173.07 |
| Losses of fixed assets write-off ("-" indicates income) | 18,548.29 | 50,463.95 |
| Finance costs ("-" indicates income) | -2,415,195.58 | 9,254,841.95 |
| Investment loss ("-" indicates income) | -2,287,274.87 | -72,378.41 |
| Decrease in deferred income tax assets ("-" indicates increase) | 1,306,113.02 | 1,938,062.68 |
| Increase in deferred income tax liabilities ("-" indicates decrease) | 7,523,160.15 | 4,003,929.96 |
| Decrease in inventory ("-" indicates increase) | -192,512,816.22 | -31,434,851.67 |
| Decrease in operating receivables ("-" indicates increase) | -100,988,107.49 | -25,015,343.48 |
| Increase in operating payables ("-" indicates decrease) | 186,790,654.92 | 378,785,937.07 |
| Net cash flows from operating activities | 504,558,588.33 | 734,985,638.36 |
| 2. Significant investment and financing activities not involving cash: | -- | -- |
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 896,433,846.64 | 574,702,760.83 |
| Less: Opening balance of cash | 675,996,852.97 | 371,129,472.06 |
| Net increase in cash and cash equivalents | 220,436,993.67 | 203,573,288.77 |
(2) Net cash paid to acquire subsidiaries during the period: None.
(3) Net cash received from the disposal of subsidiaries during the period: None
(4) Constitution of cash and cash equivalents
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| I. Cash | 896,433,846.64 | 675,996,852.97 |
| Including: Cash on hand | 81,123.62 | 76,152.38 |
| Bank deposits always available for payment | 892,229,613.53 | 675,589,471.75 |
| Other monetary funds always available for payment | 4,123,109.49 | 331,228.84 |
| III. Closing Balance of Cash and Cash Equivalents | 896,433,846.64 | 675,996,852.97 |
Other explanation: None
80. Items notes in the statement of changes in owner's equity
Note of the item name and amount of "Other" after adjustment of the closing balance last year andother issues: None
81. Assets with restricted right to use or ownership
Unit: RMB
| Item | Closing book value of the period | Reason for restriction |
| Other monetary funds | 37,040,130.33 | Margins for letter of credit and notes were issued. |
| Total | 37,040,130.33 | -- |
Other explanation: None
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Closing balance of foreign currency | Converted exchange rate | Closing converted balance of RMB |
| Monetary funds | -- | -- | 134,151,280.56 |
| Including: USD | 17,718,773.09 | 7.0825 | 125,493,210.41 |
| EUR | |||
| HKD | 9,474,769.82 | 0.9138 | 8,658,044.66 |
| MOP | 28.74 | 0.8870 | 25.49 |
| Accounts receivable | -- | -- | 5,770,571.91 |
| Including: USD | 148,630.49 | 7.0825 | 1,052,675.45 |
| EUR | |||
| HKD | 5,162,942.07 | 0.9138 | 4,717,896.46 |
| Long-term Loans | -- | -- |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | 273,965.37 | ||
| Including: HKD | 299,808.90 | 0.9138 | 273,965.37 |
| Accounts payable | 210,981,113.83 | ||
| Including: USD | 29,476,438.24 | 7.0825 | 208,766,873.83 |
| JPY | 33,600,000.00 | 0.0659 | 2,214,240.00 |
| Other payables | 3,583,345.41 | ||
| Including: HKD | 3,916,523.14 | 0.9138 | 3,578,918.85 |
| USD | 625.00 | 7.0825 | 4,426.56 |
| Prepaid accounts | 1,564,934.84 | ||
| Including: USD | |||
| EUR | 196,400.00 | 7.9681 | 1,564,934.84 |
| Contract liabilities | 283,545.02 | ||
| Including: HKD | 235,420.85 | 0.9138 | 215,127.57 |
| USD | 9,660.07 | 7.0825 | 68,417.45 |
Other explanation: None
(2) Overseas business entities, especially important ones, shall disclose the main overseasbusiness address, the standard currency for accounting and selection basis. If there arechanges in the standard currency for accounting, reasons shall be also provided.
√ Applicable □ Inapplicable
| Overseas business entities | Business address | Standard currency for accounting |
| Zhong Shun International Co., Ltd. | Hong Kong | RMB |
| C&S Hong Kong Co., Ltd. | Hong Kong | RMB |
| C&S (Macao) Co., Ltd. | Macau | RMB |
83. Hedges
Disclosure of hedged items and related hedging instruments, qualitative and quantitativeinformation about hedged risk according to the types of hedging: None
84. Government grants
(1) Basic information on government grants
Unit: RMB
| Category | Amount | Reporting items | Amount recognized as profit or loss for the current period |
| Related to assets | 24,880,000.00 | Deferred income | |
| Related to assets | 4,272,824.50 | Other income | 4,272,824.50 |
| Related to income | 10,204,975.55 | Other income | 10,204,975.55 |
| Related to income | 1,997,067.57 | Non-operating income | 1,997,067.57 |
| Total | 41,354,867.62 | 16,474,867.62 |
(2) Return of government grants
□ Applicable √ Inapplicable
Other notes: See Note VII, 51, 67, 74
85. Others: None
VIII. Changes in the Combination
1. Business combinations not under common control
(1) Business combinations not under common control of the current period: None
(2) Combination costs and goodwill
Method of determining the fair value of combination costs and notes of contingent considerationand its changes: NoneMain reasons for the formation of huge goodwill: NoneOther explanation: None
(3) Acquiree's identifiable assets and liabilities on the acquisition dateMethod of determining the fair value of identifiable assets and liabilities: NoneAcquiree's contingent liabilities assumed in a business combination: NoneOther explanation: None
(4) Profit or loss recalculated according to the fair value of equity held before the acquisitiondateWhether there are transactions through which business combination is achieved in stages and thatobtain the control within the reporting period
□ Yes √ No
(5) Note of being unable to determine the consideration or the fair value of acquiree'sidentifiable assets and liabilities on the acquisition date or at the end of the current period ofcombination: None
(6) Other notes: None
2. Business combinations involving enterprises under common control
(1) Business combinations under common control of the current period: None
(2) Combination costs: None
(3) Book value of assets and liabilities of the combined party on the date of combinationContingent liabilities of the combined party assumed in a business combination: NoneOther explanation: None
3. Reverse purchase
Basic information of transactions, basis for transactions constituting reverse purchase, whetherassets and liabilities retained by listed companies constitute a business and its basis, determining ofcombination costs, adjustment of equity amount and calculation when dealing with as equitytransactions: None
4. Disposal of subsidiaries
Whether the situation that one disposal of investment in a subsidiary results in a loss of control isidentified
□ Yes √ No
Whether the situation that the disposal of investment in a subsidiary is achieved in stages throughmultiple transactions and lose the control within the reporting period is identified
□ Yes √ No
5. Changes in the scope of combination due to other reasons
Note of changes in the scope of combination due to other reasons (establishment, liquidation ofsubsidiaries, etc.) and related situations: None
6. Others: None
IX. Equities in Other Entities
1. Equity in subsidiaries
(1) Composition of an enterprise group
| Name of the subsidiary | Main business address | Location of registration | Principal activities | Shareholding percentage | Obtaining method | |
| Direct | Indirect | |||||
| Jiangmen Zhongshun Paper Co., Ltd. | Jiangmen, Guangdong | Jiangmen, Guangdong | R&D, production, and sales (including online sales): Household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; and sales (including online sales) of Class I and II medical devices. (Business activities above are not restricted by the Special Administrative Measures for the Access of Foreign Investment) (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | 88.25% | 11.75% | Capital contribution for establishment |
| Zhejiang Zhongshun Paper Co., Ltd. | Jiaxing, Zhejiang | Jiaxing, Zhejiang | General business activities: paper products manufacturing; sales of paper products; sales of paper pulp; sales of personal hygiene products; sales of hygiene products and disposable medical products; sales of disinfectant (hazardous chemicals exclusive); sales of class I medical devices; retail of class I medical devices; sales of class II medical devices; retail of class II medical devices; wholesale of medical face masks; retail of medical face masks; sales of general merchandise; retail of daily necessities; sales of maternal and child supplies; wholesale of kitchenware, sanitary ware and daily sundries; wholesale of cosmetics; retail of cosmetics; wholesale of needle textiles and raw materials; sales of needle textiles; sales of chemical industry products (licensed chemical products exclusive); Internet sales (products requiring license for sale exclusive) (Except for business activities subject to approval in accordance with laws, other business activities shall be carried out by business license.) (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) | 75.00% | 25.00% | Capital contribution for establishment |
| C&S Hong Kong Co., Ltd. | Hong Kong | Hong Kong | Purchase of pulp | 100.00% | Capital contribution for establishment | |
| C&S (Yunfu) Paper Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, wholesale, retail and online sales: High-end household paper series products, hygiene products, maternal and infant products, daily necessities, cosmetics, medical devices, hygiene materials, non-woven products, polymer materials and products, daily groceries, and sterilization supplies (excluding hazardous chemicals); import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the country or subject to administrative approval); and warehouse services (limited to warehouses qualified in fire protection without hazardous chemicals). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | 100.00% | Capital contribution for establishment | |
| C&S (Yunfu) Trading Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | Wholesale, retail, online sales: paper, wood pulp, hygiene products, maternal and child supplies, cosmetics, daily necessities, medical devices, daily sundries, disinfectant products (hazardous chemicals exclusive). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | 100.00% | Capital contribution for establishment | |
| C&S (Macao) Co., Ltd. | Macau | Macau | Wholesale trade | 100.00% | Capital contribution for establishment | |
| Zhongshan Zhongshun Trading Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdong | Business activities cover wholesale, retail and online sales (sales only on the third-party platform) of paper products (printing products exclusive), wood pulp, general merchandise, hygiene products, cosmetics, nonwoven products, chemical products for daily use and class I medical devices; warehousing (hazardous chemicals and precursor chemicals exclusive); import and export of goods and technology; operations of class II and class III medical devices. (Business activities prohibited by laws and administrative regulations are exclusive; business activities restricted by laws and administrative regulations shall not be carried out until permit has been obtained). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) | 100.00% | Business combinations involving enterprises under common control | |
| Xiaogan C&S Trading Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Import, export and sales of paper products, general merchandise and pulp boards; sales of cosmetics, shower gel and sanitary pads; sales of baby products (food exclusive) (Business activities subject to permit shall not be carried out until permit of competent authorities has been obtained) | 100.00% | Business combinations involving enterprises under common control | |
| Beijing C&S Paper Co., Ltd. | Beijing | Beijing | Sales of paper products, daily necessities, paper pulp, pulp boards; import and export of goods. (The Company may select business items and engage in business activities at its own discretion according to laws; business items subject to approval in accordance with laws shall be conducted within the approved scope upon approval of relevant authorities; may not engage in any business activities prohibited or restricted by the city's industrial policies.) | 100.00% | Business combinations involving enterprises under common control | |
| Chengdu Zhongshun Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | Sales of household paper, cleaning products, general merchandise, hygiene products, baby products, cosmetics, nonwoven products, feminine hygiene products, chemical products for daily use, daily necessities, medical devices, medical supplies and disinfectant products (hazardous chemicals exclusive); electronic commerce [Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained]. | 100.00% | Business combinations involving enterprises under common control | |
| Hangzhou Jie Rou Trading Co., Ltd. | Hangzhou, Zhejiang | Hangzhou, Zhejiang | Wholesale, retail: paper products, paper pulp, general merchandise; import and export of goods and technology (Business activities prohibited by national laws and administrative regulations are exclusive; business activities restricted by laws and administrative regulations shall not be carried out until permit has been obtained); other legitimate business activities not subject to approval (Business activities subject to approval in accordance with laws shall | 100.00% | Business combinations involving enterprises under |
| not be carried out until approval from competent authorities has been obtained) | common control | |||||
| Shanghai Huicong Paper Co., Ltd. | Shanghai | Shanghai | Household paper, paper pulp, pulp boards, import and export of goods and technology. [Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.] | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Hubei) Paper Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Production and sales of household paper products, general merchandise, chemical products for daily use (hazardous chemicals exclusive), disinfectant products (hazardous chemicals exclusive); R&D, production and sales of daily necessities and hygiene products such as wet wipes, sanitary pads, pant style sanitary pads, liners, adult diapers, and baby products (food exclusive) such as baby diapers and cotton tissues, makeup remover wipes, cosmetics; wholesale and retail of class I and class II medical devices. (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained) | 93.375% | 6.625% | Business combinations involving enterprises under common control |
| Zhong Shun International Co., Ltd. | Hong Kong, China | Hong Kong, China | Sales of paper products | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Sichuan) Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | R&D, production, processing, and sales of hygiene products [tissues (paper)], baby products, daily necessities, non-woven products, and feminine hygiene products; export of self-produced products and import of necessary mechanical equipment, parts and accessories, and raw and auxiliary materials; and sales of daily chemical products, articles of daily use, medical devices, medical supplies, and sterilization supplies (excluding hazardous chemicals) [Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.] ] | 100.00% | Business combinations not under common control | |
| C&S (Zhongshan) Paper Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdong | Production, processing and sales: high-class household paper products (printing process exclusive); import and export of pulp boards (Business activities prohibited by laws and administrative regulations are exclusive; business activities restricted by laws and administrative regulations shall not be carried out until permit has been obtained). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) | 100.00% | Business combinations not under common control | |
| Sun Daily Necessities | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, processing, and online sales: paper products, hygiene products, cosmetics, nonwoven products, plastic products for daily use, chemical products for daily use, metalware | 50.00% | 50.00% | Capital contribution |
| Co., Ltd. | for daily use, rubber products for daily use, and ceramics for daily use; import and export of goods or technology (Import and export of goods or technology prohibited by the country or subject to administrative approval exclusive). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) ) | for establishment | ||||
| C&S (Dazhou) Paper Co., Ltd. | Dazhou, Sichuan | Dazhou, Sichuan | R&D, production, processing, and sales (online sales inclusive): household paper, tissue boxes, hygiene products, cosmetics, non-woven products, plastic products, metalware, rubber products, ceramics, baby products, feminine hygiene products and daily necessities; bamboo and forest trees planting; acquisition of raw materials of bamboo and wood for paper making; R&D, production and sales of bamboo pulp, wood pulp, bamboo chips and wood chips; combined heat and power and sales; warehouse leasing; processing and sales of lime and limestone; processing of industrial wastewater and gray water reuse; general import and export business; sales of construction materials, hardware and electrical products, chemical products (hazardous products exclusive). (Business activities subject to approval in accordance with laws shall not be carried out until approval from competent authorities has been obtained.) | 100.00% | Capital contribution for establishment |
Note of the difference between the percentage of shares held by minority shareholders in asubsidiary and the percentage of their voting rights: NoneBasis for holding 50% or less than of the voting rights but controlling the investee, or holding 50%or more of the voting rights but not controlling the investee: NoneBasis for controlling the important consolidated structured entities: NoneBasis for determining whether the Company is an agent or a principal: NoneOther notes: shares held indirectly belong to the shares held by wholly-owned subsidiaries of theCompany
(2) Important non-wholly-owned subsidiaries
Note that the percentage of shares held by minority shareholders in a subsidiary is different from thepercentage of their voting rights: NoneOther notes: There are no important non-wholly-owned subsidiaries of the Company
(3) Main financial information of important non-wholly-owned subsidiaries: None
(4) Significant restrictions on the use of the assets and the repayment of the debts of theenterprise group: None
(5) Financial or other support provided to consolidated structured entities: None
2. Transactions in which the share of owner's equity in a subsidiary changes and still controlsthe subsidiary
(1) Description of changes in the share of owner’s equity in the subsidiary: None
(2) The impact of the transaction on minority shareholders’ equity and the equity attributableto owners of the parent companyOther notes: There are no transactions of the Company in which the owner's equity share of asubsidiary changes and still controls the subsidiary.
3. Interests in joint arrangements or associates
(1) Important joint ventures or associates
Note that the percentage of shares in joint ventures or associates is different from the percentage ofvoting rights: NoneBasis for holding less than 20% of the voting rights but with significant influence, or holding 20%or more of the voting rights but without significant influence: None
(2) Main financial information of important joint ventures: None
(3) Main financial information of important associates: None
(4) Summary financial information of unimportant joint ventures and associates: None
(5) Description of significant restrictions on the ability of joint ventures or associates totransfer funds to the Company: None
(6) Excess losses incurred by joint ventures or associates: None
(7) Unconfirmed commitments related to the investment in joint ventures: None
(8) Contingent liabilities related to the investment in joint ventures or associates: None
4. Important joint operation
Note that the percentage of shares is different from the percentage of voting rights in jointoperations:
Basis for joint operation as a separate entity but classified as joint operation:
Other descriptionsThere was no important joint operation of the Company
5. Interests in unconsolidated structured entities
Description of unconsolidated structured entities:
There are no interests in unconsolidated structured entities of the Company.
6. Others: None
X. Risks Associated with Financial InstrumentsThe main financial instruments of the Company include monetary funds, notes receivable, accountsreceivable, notes payable, accounts payable, other payables and loans, etc. Please refer to relevantitems of "Note VII" for detailed information of all financial instruments. The risks associated withthese financial instruments and the risk management policies adopted by the Company to reducethese risks are as follows. The management of the Company manages and monitors these riskexposures to ensure that the above risks are kept within control.The goal of the Company's risk management is to strike a proper balance between risks and gainsand minimize the negative impact of risks on the business performance of the Company whilemaximizing the interests of shareholders and other equity investors. Based on this risk managementgoal, the basic strategy of the Company’s risk management is to determine and analyze all kinds ofrisks faced by the Company, clarify the minimum of risk acceptance and conduct risk management,and monitor risks of all kinds in a timely and reliable manner to control risks within the limits.
1. Credit risk
Credit risk refers to the risk of financial losses of one party caused by the failure of the other partyto perform its obligations. The main risk facing the Company is customer credit risk caused by O/A.In order to reduce credit risk, the Company only conducts transactions with recognized customerswith good credit status, and continuously monitors the accounts receivable through creditmonitoring of existing customers and aging analysis to ensure that the Company does not face therisk of bad debts and keep the overall credit risk within control.
2. Interest rate risk
Interest rate risk refers to the risk of fluctuations of the fair value or future cash flow of financialinstruments due to changes in market interest rates. The interest rate risk faced by the Companymainly comes from bank borrowing. By developing a good relationship with banks and carrying outadaptive design of credit lines, types of credits, and credit terms, the Company ensures sufficientbank credit lines to meet its various financing needs. The risk of interest rate fluctuation can bereasonably reduced by shortening the term of a single loan and specially stipulating prepaymentterms.
3. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations of the fair value or future cash flow offinancial instruments due to changes in foreign exchange rates. The Company tries its best to matchforeign currency income with foreign currency expenditure to reduce foreign exchange risks.Foreign exchange risks borne by the Company are mainly related to US dollars. Except forpurchasing and selling in USD by its overseas subsidiaries, other major business activities of theCompany are priced and settled in RMB. See "Note VII, 82" for the conversion of foreign currencyfinancial assets and liabilities into RMB on June 30, 2020. During the reporting period, theCompany generated exchange profit and loss of -RMB993,705.23.
4. Liquidity risk
Liquidity risk refers to the risk of capital shortage when an enterprise fulfills its obligation to settleaccounts by delivering cash or other financial assets. The Company's policy is to ensure that it hassufficient cash to repay mature debts. Liquidity risk is centrally controlled by the financialdepartments of the Company. The financial departments monitor cash balances, negotiablesecurities that can be cashed in at any time, and carry out rolling forecasts on cash flows in the nextsix months to ensure that the Company has sufficient funds to repay debts under all reasonableforecasts.XI. Disclosure of Fair Value
1. Assets measured at fair value and the fair value of liabilities at the end of the reportingperiod: None
2. Basis for determining the market price of recurring and non-recurring fair valuemeasurement items of Level 1: None
3. Qualitative and quantitative information on important parameters and valuationtechniques used for recurring and non-recurring fair value measurement items of Level 2:
None
4. Qualitative and quantitative information on important parameters and valuationtechniques used for recurring and non-recurring fair value measurement items of Level 3:
None
5. Adjustment information and analysis of sensitivity of unobservable parameters betweenbook values of recurring fair value measurement items of Level 3 at the beginning of thereporting period and that at the end of the reporting period.
6. Recurring fair value measurement items with conversion between different levels, reasonsfor such conversion and policies for determining the time of conversion: None
7. Changes in valuation techniques within the reporting period and reasons for such changes:
None
8. Financial assets not measured at fair value and the fair value of financial assets: None
9. Others: None
XII. Related Parties and Related Party Transactions
1. Information on the parent company of the Company
| Name of parent company | Location of registration | Principal activities | Registered capital | Shareholding percentage of parent company to the Company | Percentage of voting right of parent company to the Company |
| Guangdong Zhongshun Paper Group Co., Ltd. | Zhongshan, Guangdong | External investment; consulting of information on commodities circulation (exclusive of real estate, labor services, financial futures, and studying abroad) | RMB30 million | 28.64% | 28.64% |
Explanation of the information on the parent company of the CompanyThe ultimate controller of the Company is Mr. Deng Yingzhong, the father, Mr. Deng Guanbiao andMr. Deng Guanjie, whose two sons.Other explanation: None
2. Information on the subsidiaries of the Company
See Note IX Equities in Other Entities for details of the information on the subsidiaries of theCompany.
3. Information on the joint ventures and associates of the CompanySee Notes for details of the important joint ventures or associates of the Company.Other descriptionsThere are no interests in the arrangement of joint ventures or associates of the Company.
4. Information on other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| (Hong Kong) Zhongshun Co., Ltd. | The second-largest shareholder of the Company, with 20.32% of the Company's shares |
| Guangzhou Zhongshun Trade Co., Ltd. | The Company controlled by the nephew and the husband of the niece of Mr. Deng Yingzhong, the Chairman of the Company |
| Bama Zhongshun Health Products Co., Ltd. | The Company controlled by Guangdong Zhongshun Paper Group Co., Ltd., the Company's controlling shareholder |
| Yantai Zhongshun Network Technology Co., Ltd. | The partially-owned subsidiary of Bama Zhongshun Health |
| Products Co., Ltd. controlled by the Company's controlling shareholders | |
| Zhongshun Industrial Investment (Shenzhen) Co., Ltd. | The Company controlled by de facto controllers, Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie |
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor |
| Chongqing Qinyue Trading Co., Ltd. | A company where the senior manager Yue Yong's brother holds shares and serves as a supervisor |
Other descriptionsNote: The Company's directors, supervisors, senior managers and their close family members arerelated to the Company.
5. Information on related party transactions
(1) Related party transactions for purchase and sale of merchandise, and provision andacceptance of labor servicesPurchase of Merchandise/Acceptance of Labor Services
Unit: RMB
| Related party | Content of related party transactions | Incurred in the current period | Approved transaction limit | Whether to outstrip the transaction limit | Incurred in the prior period |
| Bama Zhongshun Health Products Co., Ltd. | Others | 0.00 | No | 123,516.43 | |
| Total | 0.00 | 123,516.43 |
Sale of Merchandise/Provision of Labor Services
Unit: RMB
| Related party | Content of related party transactions | Incurred in the current period | Incurred in the prior period |
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | Sale of goods | 828,658.05 | 707,224.33 |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | Sale of goods | 180,809.75 | 691,937.12 |
| Chongqing Qinyue Trading Co., Ltd. | Sale of goods | 247,979.83 | 560,413.05 |
| Guangdong Zhongshun Paper Group Co., Ltd. | Sale of goods | 56,637.17 | |
| Total | 1,314,084.80 | 1,959,574.50 |
Explanation of the related party transaction for purchase and sale of merchandise, and provision andacceptance of labor services: None
(2) Related entrusted management/contracting and entrusting management/contracting outExplanation of related custody/contracting: NoneExplanation of related management/contracting out: None
(3) Related lease
The Company as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Lease fee confirmed in the current period | Lease fee confirmed in the last period |
| Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie | Housing lease | 1,474,047.18 | 593,421.30 |
Explanation of related lease: None
(4) Related guarantee: None
(5) Interbank borrowing between related parties: None
(6) Assets transfer and debt reorganization between related parties: None
(7) Rewards for key managers
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Rewards for key managers | 8,140,753.70 | 2,860,477.56 |
(8) Other related party transactions
There were 16 key managers in the Company in the first half of 2020, 14 in the first half of 2019.
6. Receivables from and payables to related parties
(1) Receivables
Unit: RMB
| Item name | Related party | Balance at the end of the year | Balance at the beginning of the year | ||
| Book balance | Impairment provision | Book balance | Impairment provision | ||
| Accounts receivable | Chongqing Qinyue Trading Co., Ltd. | 166,513.67 | 3,330.27 | 130,446.49 | 2,608.93 |
(2) Payables
Unit: RMB
| Item name | Related party | Book balance at the end of the period | Book balance at the beginning of the period |
| Contract liabilities | Pengzhou Lexiangshenghuo | 771.07 | 503.67 |
| Trading Co., Ltd. | |||
| Contract liabilities | Sichuan West Lexiangshenghuo Trading Co., Ltd. | 70,468.90 | 4,783.90 |
7. Commitments of related parties: None
8. Others: None
XIII. Share-based Payment
1. Overall information on share-based payment
√ Applicable □ Inapplicable
Unit: RMB
| Company's total amount of all equity instruments granted in the current period | 0.00 |
| Company's total amount of all equity instruments exercised in the current period | 8,184,936.00 |
| Company's total amount of all equity instruments expiring in the current period | 802,722.00 |
| Scope of exercise prices and Remaining term of contracts of the Company' stock options issued at the end of the reporting period | The initial grant price of the Company's stock options issued at the end of the reporting period is RMB8.53 per share, and that of reserved ones is RMB14.04 per share. The contracts will be valid from the date of granting of the stock options to the date of exercise or innovation of all the stock options, which should not exceed 60 months. |
Other explanation: None
2. Equity-settled share-based payment
√ Applicable □ Inapplicable
Unit: RMB
| Method of determining the fair value of equity instruments at the grant date | 1. Restricted shares: the stock closing prices at the grant date 2. Stock options: Black-Scholes model for option pricing 3. Employee stock ownership plan: the stock closing prices at the grant date |
| Basis for determining the number of vested equity instruments | Upon approval of the general meeting |
| Reasons for the major difference between the estimation of the current period and that of the last period | None |
| The accumulated amount of equity-settled share-based payments recognized as capital surplus | 116,663,060.26 |
| Total fees confirmed by the equity-settled share-based payment in the current period | 52,983,211.08 |
Other explanation: None
3. Cash-settled share-based payment
□ Applicable √ Inapplicable
4. Revision and termination of share-based payment
There was no revision and termination of share-based payment of the Company during the reportingperiod.
5. Others: None
XIV. Commitment and Contingencies
1. Significant commitments
Significant commitments on the balance sheet dateAs at June 30, 2020, the Company had no significant commitments that should have been disclosedbut are not been disclosed.
2. Contingencies
(1) Significant or contingent matters on the balance sheet date
As at June 30, 2020, the Company had no significant or contingent matters that should have beendisclosed but are not been disclosed.
(2) Explanations are also necessary if the Company has no significant or contingent matters tobe disclosed.There are no significant or contingent matters to be disclosed in the Company.
3. Others: None
XV. Matters after Balance Sheet Date
1. Important non-adjustment: None
2. Profit distribution: None
3. Sales return: None
4. Explanation on other matters after balance sheet date: None
XVI. Other Significant Matters
1. Correction to previous accounting errors
(1) Retroactive restatement approach
(2) Prospective approach
2. Debt restructuring: None
3. Assets replacing
(1) Exchange of non-monetary assets: None
(2) Other assets replacing: None
4. Annuities plan: None
5. Discontinued operations
Other explanation: None
6. Segment information
(1) Determination basis and accounting policy of reporting segments.The Company has no various business segments with different economic features and does notdetermine the business segments according to internal organization structure, managementrequirements and internal reporting policy. Therefore, there was no information on reportingsegments based on business segments to be disclosed.
(2) Financial information on reporting segments: None
(3) If the Company has no reporting segments or refuses to disclose the total assets andliabilities of all the reporting segments, explanation on reasons is necessary: None
(4) Other explanations: None
7. Other important transactions and matters that may affect the decisions of investors: None
8. Others: None
XVII. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Accounts receivable disclosed by categories
Unit: RMB
| Type | Balance at the end of the year | Balance at the beginning of the year |
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Wherein: | ||||||||||
| Accounts receivable for which bad debts reserve is set aside in portfolios | 88,905,031.05 | 100.00% | 1,600,486.66 | 1.80% | 87,304,544.39 | 128,480,869.70 | 100.00% | 1,277,442.83 | 0.99% | 127,203,426.87 |
| Wherein: | ||||||||||
| Aging portfolio | 61,915,074.31 | 69.64% | 1,600,486.66 | 2.58% | 60,314,587.65 | 44,573,108.11 | 34.69% | 1,277,442.83 | 2.87% | 43,295,665.28 |
| Related party portfolio | 26,989,956.74 | 30.36% | 26,989,956.74 | 83,907,761.59 | 65.31% | 83,907,761.59 | ||||
| Total | 88,905,031.05 | 100.00% | 1,600,486.66 | 1.80% | 87,304,544.39 | 128,480,869.70 | 100.00% | 1,277,442.83 | 0.99% | 127,203,426.87 |
Bad debts reserve set aside individually: NoneBad debts reserve set aside individually: NoneBad debts reserves set aside in portfolios: 1,600,486.66
Unit: RMB
| Name | Balance at the end of the year | ||
| Book balance | Impairment provision | Provision ratio | |
| Within the credit period | 50,696,422.08 | 1,013,928.45 | 2.00% |
| Credit period - one year | 10,962,396.22 | 548,119.81 | 5.00% |
| One to two years | 256,256.01 | 38,438.40 | 15.00% |
| Two to three years | 0.00 | 0.00 | 30.00% |
| Three to five years | 0.00 | 0.00 | 50.00% |
| Over five years | 0.00 | 0.00 | 100.00% |
| Total | 61,915,074.31 | 1,600,486.66 | -- |
Description of reason for the portfolio:
Accounts receivable with the same age have similar credit risk characteristics.Bad debts reserves set aside in portfolios: NoneDescription of reason for the portfolio:
If the bad debts reserve of accounts receivable is set aside according to general model of expectedcredit loss, please refer to the disclosure method of other receivables to disclose relevantinformation on bad debts reserve:
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
| Aging | Balance at the end of the year |
| Within one year (inclusive) | 88,648,775.04 |
| One to two years | 256,256.01 |
| Total | 88,905,031.05 |
(2) Bad debts reserve that is set aside, recovered or transferred backProvision of bad debts reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the year | Amount of change in the reporting period | Balance at the end of the year | |||
| Provision | Recovery or transfer back | Write-offs | Others | |||
| Accounts receivable | 1,277,442.83 | 323,043.83 | 0.00 | 0.00 | 0.00 | 1,600,486.66 |
| Total | 1,277,442.83 | 323,043.83 | 0.00 | 0.00 | 0.00 | 1,600,486.66 |
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period isimportant: None
(3) The accounts receivable actually written off in the reporting periodSignificant write-offs of accounts receivable wherein: NoneExplanation on write-offs of accounts receivable:
The Company has no accounts receivable actually written off in the current period.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the reporting period | Percentage of total balance of accounts receivable at the end of the reporting period | Closing balance for bad debts reserve |
| 1st | 23,675,211.68 | 26.63% | 0.00 |
| 2nd | 12,054,300.93 | 13.56% | 241,086.02 |
| 3rd | 8,198,702.86 | 9.22% | 204,924.14 |
| 4th | 6,601,029.89 | 7.42% | 226,227.16 |
| 5th | 5,470,556.64 | 6.15% | 128,677.45 |
| Total | 55,999,802.00 | 62.98% |
(5) Accounts receivable derecognized due to the transfer of financial assetsThe Company has no accounts receivable derecognized due to the transfer of financial assets at theend of the reporting period.
(6) Amount of assets and liabilities that are formed by the transfer and ongoing involvementof accounts receivableThe Company has no amount of assets and liabilities that are formed by the transfer and ongoinginvolvement of accounts receivable at the end of the reporting period.
Other explanation: None
2. Other accounts receivable
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year |
| Other receivables | 42,634,717.52 | 637,511,752.54 |
| Total | 42,634,717.52 | 637,511,752.54 |
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest
Other explanation: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Important dividends receivable exceeding one year: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
Other explanation: None
(3) Other receivables
1) Classification by the nature of amount of other receivables
Unit: RMB
| Nature of amount | Book balance at the end of the period | Book balance at the beginning of the period |
| Margins and deposits | 99,401.05 | 31,500.00 |
| Current accounts | 20,531,470.60 | 636,793,035.80 |
| Reserve | 763,749.17 | 702,001.66 |
| Others | 22,446,389.81 | 44,314.48 |
| Total | 43,841,010.63 | 637,570,851.94 |
2) Provision of bad debts reserve
Unit: RMB
| Impairment provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| As at January 1, 2020 | 59,099.40 | 59,099.40 |
| Balance as at January 1, 2020 in the reporting period | - | - | - | - |
| Provision in the reporting period | 1,154,782.82 | 1,154,782.82 | ||
| Write-offs in the reporting period | 7,589.11 | 7,589.11 | ||
| Balance as at June 30, 2020 | 1,206,293.11 | 1,206,293.11 |
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
| Aging | Balance at the end of the year |
| Within one year (inclusive) | 43,809,656.58 |
| One to two years | 21,000.00 |
| Two to three years | 0.00 |
| Over three years | 10,354.05 |
| Three to four years | 8,354.05 |
| Over five years | 2 000,00 |
| Total | 43,841,010.63 |
3) Bad debts reserve that is set aside, recovered or transferred backProvision of bad debts reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the year | Amount of change in the reporting period | Balance at the end of the year | |||
| Provision | Recovery or transfer back | Write-offs | Others | |||
| Other receivables | 59,099.40 | 1,154,782.82 | 0.00 | 7,589.11 | 0.00 | 1,206,293.11 |
| Total | 59,099.40 | 1,154,782.82 | 0.00 | 7,589.11 | 0.00 | 1,206,293.11 |
The Company has actually written off other accounts receivable of RMB7,589.11 during thisreporting period.Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period isimportant: None
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Written-off amount |
| Other receivables actually written off | 7,589.11 |
Wherein, write-offs of important other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of amount | Balance at the end of the year | Aging | Percentage of total closing balance of other receivables | Closing balance for bad debts reserve |
| 1st | Others | 22,214,407.06 | Within one year | 50.67% | 1,110,720.35 |
| 2nd | Current accounts | 18,866,710.02 | Within one year | 43.03% | |
| 3rd | Current accounts | 1,000,000.00 | Within one year | 2.28% | |
| 4th | Others | 348,626.21 | Within one year | 0.80% | 17,431.31 |
| 5th | Others | 326,010.00 | Within one year | 0.74% | 16,300.50 |
| Total | -- | 42,755,753.29 | -- | 97.52% | 1,144,452.16 |
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement ofother receivables: NoneOther explanation: None
3. Long-term equity investment
Unit: RMB
| Item | Balance at the end of the year | Balance at the beginning of the year | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 1,918,835,099.92 | 1,918,835,099.92 | 1,231,245,128.96 | 1,231,245,128.96 | ||
| Total | 1,918,835,099.92 | 1,918,835,099.92 | 1,231,245,128.96 | 1,231,245,128.96 | ||
(1) Investment in subsidiaries
Unit: RMB
| Investee | Opening balance (book value) | Increase and decrease in the current period | Closing balance (book value) | Closing balance of impairment | |||
| Additional investment | Decreased investment | Provision for impairment | Others | ||||
| Zhongshan Zhongshun Trading Co., Ltd. | 91,611,393.55 | 6,255,970.62 | 97,867,364.17 | ||||
| C&S (Sichuan) Paper Co., Ltd. | 161,228,847.04 | 6,427,368.42 | 167,656,215.46 | ||||
| Zhejiang Zhongshun Paper Co., Ltd. | 51,259,117.44 | 3,019,010.34 | 54,278,127.78 | ||||
| C&S | 12,683,100.00 | 0.00 | 12,683,100.00 | ||||
| (Zhongshan) Paper Co., Ltd. | |||||||
| Jiangmen Zhongshun Paper Co., Ltd. | 697,499,879.18 | 687,990.90 | 698,187,870.08 | ||||
| C&S (Hubei) Paper Co., Ltd. | 43,037,008.50 | 147,600,000.00 | 2,762,869.08 | 193,399,877.58 | |||
| C&S (Yunfu) Paper Co., Ltd. | 135,405,965.05 | 518,000,000.00 | 2,468,898.78 | 655,874,863.83 | |||
| C&S (Yunfu) Trading Co., Ltd. | 30,200,274.51 | 0.00 | 30,200,274.51 | ||||
| Chengdu Zhongshun Paper Co., Ltd. | 1,237,694.60 | 44,850.00 | 1,282,544.60 | ||||
| Xiaogan C&S Trading Co., Ltd. | 539,220.62 | 9,510.00 | 548,730.62 | ||||
| Shanghai Huicong Paper Co., Ltd. | 2,796.00 | 1,584.00 | 4,380.00 | ||||
| Hangzhou Jie Rou Trading Co., Ltd. | 58,048.00 | 23,772.00 | 81,820.00 | ||||
| Zhong Shun International Co., Ltd. | 281,784.47 | 288,146.82 | 569,931.29 | ||||
| Sun Daily Necessities Co., Ltd. | 200,000.00 | 0.00 | 200,000.00 | ||||
| C&S (Dazhou) Paper Co., Ltd. | 6,000,000.00 | 0.00 | 6,000,000.00 | ||||
| Total | 1,231,245,128.96 | 665,600,000.00 | 21,989,970.96 | 1,918,835,099.92 |
(2) Investment in associates and joint ventures: None
(3) Other explanation: None
4. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 493,288,414.96 | 377,715,003.73 | 483,592,449.56 | 393,879,993.17 |
| Others | 360,602,849.07 | 334,899,974.01 | 80,021,531.04 | 74,363,879.79 |
| Total | 853,891,264.03 | 712,614,977.74 | 563,613,980.60 | 468,243,872.96 |
Relevant information of performance obligation: NoneRelevant information of the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executedcontract that are not performed or fully performed at the end of the reporting period isRMB748,564.49, of which the income of RMB748,564.49 is expected to be confirmed in the yearof 2020.Other explanation: None
5. Income on investment
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Income from long-term equity-based investment accounted for using the cost method | 140,000,000.00 | |
| Others | 2,109,515.77 | 72,378.41 |
| Total | 142,109,515.77 | 72,378.41 |
6. Others: None
XVIII. Supplementary Information
1. Statement of non-recurring profit and loss of the current period
√ Applicable □ Inapplicable
Unit: RMB
| Item | Amount | Remarks |
| Profit and loss from disposal of non-current assets | -896,870.05 | |
| Government grants measured at fair value through profit and loss of the current period (except for the government grants that are closely related to the Company's business and distributed in a fix quota or amount in accordance with unified national standards) | 16,474,867.62 | |
| Profit and loss from assets entrusted to others for investment or management | 2,287,274.87 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds |
| Other non-operating expenses excluding the above items | -11,371,164.42 | |
| Less: Influence of income tax | 330,361.37 | |
| Total | 6,163,746.65 | -- |
The reasons why the Company defined certain items as non-recurring profit and loss in line with theNo. 1 Explanatory Announcement on Information Disclosure of Companies Offering Securities tothe Public—Non-recurring Profit and Loss and some items listed in the above announcement asrecurring profit and loss shall be specified.
□ Applicable √ Inapplicable
2. Return on net assets and earnings per share
| Profit in the reporting period | Weighted average return on net assets | Earnings per share | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to the ordinary shareholders of the Company | 10.46% | 0.3519 | 0.3462 |
| Net profit attributable to the ordinary shareholders of the Company after excluding non-recurring profit and loss | 10.32% | 0.3471 | 0.3415 |
3. Differences between accounting data disclosed under domestic and overseas accountingstandards
(1) Differences in net profit and net assets between the financial statements disclosed underthe IAS and the PRC GAAP in the same period.
□ Applicable √ Inapplicable
(2) Differences in net profit and net assets between the financial statements disclosed underthe overseas accounting standards and the PRC GAAP in the same period.
□ Applicable √ Inapplicable
(3) Explanation of reasons for the differences between accounting data disclosed underdomestic and overseas accounting standards. If differences in the data upon audit of overseasaudit institutions are adjusted, the name of the institution should be noted.
4. Others
Section XII Catalog of Documents for ReferenceI. The 2020 Semi-annual Report with the signature of Mr. Deng Yingzhong, Chairman of theCompany.II. The financial statements signed and sealed by Mr. Deng Yingzhong, legal representative,Mr. Dong Ye, person in charge of accounting, and Ms. Xu Xianjing, person in charge ofaccounting department of the Company.III. The original manuscripts of all corporate documents and manuscripts of announcementsthat were publicly disclosed on the newspapers designated by the China Securities RegulatoryCommission during the reporting period.IV. Other relevant information.V. Place where documents for reference can be obtained: Office of Board of Directors of theCompany.In the event of any inconsistency between the Chinese and English versions of the report, theChinese version announced shall prevail.